The UK government is mulling nationalization of Thames Water
An investment held by the infrastructure investment manager of Ontario Municipal Employees Retirement System could be put at risk by plans being considered by the U.K. government.
Britain’s largest water company, Thames Water, has financial struggles after its holding company Kemble Water Holdings Ltd. refused to put more money into the firm blaming regulatory restrictions. Kemble then defaulted on a debt interest payment.
The utility firm is too big to fail given it provides water to a quarter of the U.K. population including London, and The Guardian reported that the government is considering contingency plans that could see the firm renationalized (it was state owned until the 1980s) with lenders and shareholders potentially losing out.
A division of OMERS Infrastructure Management Inc. holds a 31% stake in Thames Water and is its largest investor, ahead of USS. Last year, Omers Farmoor Singapore PTE announced a near 30% write-down on its investment as reported by the Financial Times.
The Guardian story says that the worst case scenario in the government plan would be that shareholders including OMERS “would have their entire investment in Thames wiped out under the renationalisation plans.”
Wealth Professional has reached out to OMERS for comment.
“It is important that we get further clarity on the situation surrounding Thames Water such that the sector can focus on fixing issues in the network and meeting statutory obligations,” analysts at RBC Capital Markets LLC told Bloomberg.
Thames Water was due to announce a business plan update Friday, but this has been pushed back and is now expected next week.
