plan for collapse of Thames Water

[413x]

Thames water needs to be made an example of.
Infrastructure, sewage pumping, etc.

They all should be taken into public ownership and run properly. By asking for 40pc bill increases what difference would it make to just let it fail then take it back?

Of course it needs to be run well.

 

[adam cool dude]

Thames water needs to be made an example of.
Infrastructure, sewage pumping, etc.

They all should be taken into public ownership and run properly. By asking for 40pc bill increases what difference would it make to just let it fail then take it back?

Of course it needs to be run well.

Yeah the government could quite easily let them fail and get them cheap. To be fair they did a good thing with Northern Rock for example but that was under Labour.

 

[mattyfez]

Thames water needs to be made an example of.
Infrastructure, sewage pumping, etc.

They all should be taken into public ownership and run properly. By asking for 40pc bill increases what difference would it make to just let it fail then take it back?

Of course it needs to be run well.

Yep, it's a private company so the shareholders should loose thier investments in totality, then the government du jour should buy it back for 90p or something, with a law passed that it can never again be privatised.

The tax payer is going to get burned on this oneway, or another...so may as well make it an example as a warning to others.

 

[Silly Goose On The Loose]

Privatisation of water must be the stupidest thing to have ever been tried in this country (except Brexit).

 

[Blackjack Davy]

Yep, it's a private company so the shareholders should loose thier investments in totality, then the government du jour should buy it back for 90p or something, with a law passed that it can never again be privatised.

The tax payer is going to get burned on this oneway, or another...so may as well make it an example as a warning to others.

Eh most likely is compromise at this point tax payer will cough up a proportion to meet the investors half way, offloading the total cost to tax payers with an election looming isn't going to be popular thats going to be be a big stick to hit whichever party backs it over the head with

 

[RobHu]

Define collapsing though - taps are still allowing water to flow through.

Water supply is only one part of their job though. I think you'd be hard pressed to argue that the other bits i.e. sewerage, wastewater and future infrastructure investment (and, you know, running a financially viable business lol) are working as expected. Also, how the actual **** can you fail as a monopoly?

Eh most likely is compromise at this point tax payer will cough up a proportion to meet the investors half way, offloading the total cost to tax payers with an election looming isn't going to be popular thats going to be be a big stick to hit whichever party backs it over the head with

Suspect you are correct, but why? Investments can go down as well as up and the firms involved will (or should) have done their due diligence before buying in. Other than to 'avoid spooking foreign investment' which I think is a rather dubious argument I can't see any reason why the tax payer should get shafted here.

 

[eddyr]

Water supply is only one part of their job though. I think you'd be hard pressed to argue that the other bits i.e. sewerage, wastewater and future infrastructure investment (and, you know, running a financially viable business lol) are working as expected. Also, how the actual **** can you fail as a monopoly?



Suspect you are correct, but why? Investments can go down as well as up and the firms involved will (or should) have done their due diligence before buying in. Other than to 'avoid spooking foreign investment' which I think is a rather dubious argument I can't see any reason why the tax payer should get shafted here.

Agree completely.
Executives running the company like to tout how they have a responsibility to shareholders, that they must extract maximum value for shareholders otherwise they are in effect negligent in their duty - well if they ran a financially viable company into the ground then the investors should really be looking at them for failing in their duty, and themselves for lack of due diligence. A hard lesson needs to be learned, and the investment community should be keeping a wary eye on these individuals future business activities and others like them as money losing pariahs. Otherwise the financial/investment world is incentivised to seek ventures and permit mismanagement to detrimentally abuse infrastructure time and time again if it yields higher returns with zero or massively cushioned consequences.

 

[ttaskmaster]

You know how.

I've worked in the industry since 1996 and Thames Water are one of those in whom we have embedded consultants. We are intimately familiar with their inner workings and, being embedded, are treated/privity to the same insider knowledge as any direct employee.

If the last 40 years were a case study, the evidence that's true is pretty weak.

The post-privatisation 1990s saw a complete turnaround, from the abject failure of the industry under previous governments (Labour and Tory in the 60s and 70s) to seeing massive investment and infrastructure improvements. It's only once things became decent that the likes of RWE and Macquarrie slimed their way in.

We are being milked by foriegn states,let it go bankrupt, and split it up, have 8 water companies in London not one

We used to have ^that... and it was an absolute **** show, with zero investment, miles of red tape, siloed working, contradictions and arguments over asset responsibility, widespread dissonance, highly inconsistent bill/pricing and a service so far below even current standards you couldn't imagine.
It's things like that which led to the consolidation of responsibility under the ten water authorities.

Raising prices and asking for a hand out because dividends have been paid out is the same as to pay out, in the end.

Increasing taxes to try and fix what the previous government ****** up is pretty common. This is basically the same thing, at this point.

It is, the combined debt of the privatised water companies is almost exactly the same as the combine dicidends paid since privatisation, no water company paying a dividend should be allowed to significantly increase bills doubly so if they are failing in their basic duties.

Dividends... or loan repayments?
Most of the loans are bonded debt, which legally must be repaid.
TW shareholders have not been paid dividends for over 5 years, now.

Vile. I wish individuals involved in these company failures could be punished.
Seems a big issue to me the ceos etc get a pay off, and another job and never actually get hit for failure

CEO Steve Robertson was booted out of TW, supposedly over failed leakage targets, although the truth is more telling in regard to CEOs vs their executive board members and what happens when they try to take a more active role in sorting things out.
The issue is that it's not the CEOs who are the problem. They're little more than a figurehead. You want to look more closely at the executive team and the owners...

Yeah the government could quite easily let them fail and get them cheap. To be fair they did a good thing with Northern Rock for example but that was under Labour.

They could buy the company cheap and **** over the shareholders, yes. That was Corbyn's plan.
What they'll then stumble over are the billions in bonded loans, which they will still be legally obliged to repay, along with the costs of improving and then maintaining service. Without private investment, that will come down to public borrowing.

 

[darkgen]

They could buy the company cheap and **** over the shareholders, yes. That was Corbyn's plan.
What they'll then stumble over are the billions in bonded loans, which they will still be legally obliged to repay, along with the costs of improving and then maintaining service. Without private investment, that will come down to public borrowing.

I suspect any financial institution which issued a bonded loan will have to get in a queue or accept a defaulted return. You would then assume such an event or calculation for defaulted terms would be documented in the licensing or operating agreements issued to each private company. Suffice to say, if any such statements did exist within any of these legal agreements, it would be so ambiguous to be open to all sorts of interpretations and legal challenges.

 

[Sythe79]

I suspect any financial institution which issued a bonded loan will have to get in a queue or accept a defaulted return. You would then assume such an event or calculation for defaulted terms would be documented in the licensing or operating agreements issued to each private company. Suffice to say, if any such statements did exist within any of these legal agreements, it would be so ambiguous to be open to all sorts of interpretations and legal challenges.

No one seems to have the actual details, but aren't bonded loans similar to how the glaziers bought Manchester United with PIK bonds and even then bonded loans aren't secured. funny how there was more pushback to a football club being bought than our water companies.

Even if say the treatment plants, reservoirs, and pumping stations did have secured loans on them, so what, if the water company fails they are only worth what the government decide they are in that you can't move them, and you can't operate them without government say so.

 

[Kenai]

funny how there was more pushback to a football club being bought than our water companies.

Because the general public didn't give a flying **** about water and sewage treatment, nor have they for decades, until the media started telling them to be upset about it.

 

[ttaskmaster]

I suspect any financial institution which issued a bonded loan will have to get in a queue or accept a defaulted return. You would then assume such an event or calculation for defaulted terms would be documented in the licensing or operating agreements issued to each private company. Suffice to say, if any such statements did exist within any of these legal agreements, it would be so ambiguous to be open to all sorts of interpretations and legal challenges.

I'm not a finance geek so I don't know the full details, but whatever it's properly called (bonded or otherwise), steps were taken and things put in place that mean those loans must be repaid no matter what occurs.
I'll have to re-enquire with the finance bods and write down exactly what they say next time.

 

[darkgen]

I'm not a finance geek so I don't know the full details, but whatever it's properly called (bonded or otherwise), steps were taken and things put in place that mean those loans must be repaid no matter what occurs.
I'll have to re-enquire with the finance bods and write down exactly what they say next time.

I'd actually be really interested. Regardless of how iron-clad a contract may be, if the underlying asset or operating company collapses, I'd expect all bets are off and it then becomes a legal dog-fight over the scraps, if any, which remain. One presumes, likely incorrectly, the "government" could introduce primary legislation, heavily citing national security, which simply nullifies any prospectus for full recovery of any loans (bonded or otherwise) and offers a nominal amount, perhaps based upon the original sell-off price when it was privatised in the first place. That would certainly make all other public infrastructure based privatised entities sit-up!

 

[ttaskmaster]

I'd actually be really interested. Regardless of how iron-clad a contract may be, if the underlying asset or operating company collapses, I'd expect all bets are off and it then becomes a legal dog-fight over the scraps, if any, which remain. One presumes, likely incorrectly, the "government" could introduce primary legislation, heavily citing national security, which simply nullifies any prospectus for full recovery of any loans (bonded or otherwise) and offers a nominal amount, perhaps based upon the original sell-off price when it was privatised in the first place. That would certainly make all other public infrastructure based privatised entities sit-up!

From what I recall, it has something to do with some TWUL assets not actually being owned by TWUL, so either a parent company or maybe a shell corporation sort of deal. I know many of the office buildings and similar were sold off and TW now merely rents them from someone else. There are also various entities with Thames Water in the name, but they're not the actual undertaking company. So while Corbyn may yet see his wet dream realised (all puns and euphemisms intended), it may be a case of the actual assets being more like DLC!

 

[Nasher]

I've worked in the industry since 1996 and Thames Water are one of those in whom we have embedded consultants. We are intimately familiar with their inner workings and, being embedded, are treated/privity to the same insider knowledge as any direct employee.


The post-privatisation 1990s saw a complete turnaround, from the abject failure of the industry under previous governments (Labour and Tory in the 60s and 70s) to seeing massive investment and infrastructure improvements. It's only once things became decent that the likes of RWE and Macquarrie slimed their way in.


We used to have ^that... and it was an absolute **** show, with zero investment, miles of red tape, siloed working, contradictions and arguments over asset responsibility, widespread dissonance, highly inconsistent bill/pricing and a service so far below even current standards you couldn't imagine.
It's things like that which led to the consolidation of responsibility under the ten water authorities.


Increasing taxes to try and fix what the previous government ****** up is pretty common. This is basically the same thing, at this point.


Dividends... or loan repayments?
Most of the loans are bonded debt, which legally must be repaid.
TW shareholders have not been paid dividends for over 5 years, now.


CEO Steve Robertson was booted out of TW, supposedly over failed leakage targets, although the truth is more telling in regard to CEOs vs their executive board members and what happens when they try to take a more active role in sorting things out.
The issue is that it's not the CEOs who are the problem. They're little more than a figurehead. You want to look more closely at the executive team and the owners...


They could buy the company cheap and **** over the shareholders, yes. That was Corbyn's plan.
What they'll then stumble over are the billions in bonded loans, which they will still be legally obliged to repay, along with the costs of improving and then maintaining service. Without private investment, that will come down to public borrowing.

Thing is these companies have been operating illegally, so what legal grounds so the shareholders actually have especially if they knew about it. It might be possible to hold them partially responsible. If the government had some balls they would mug them off and play them at their own game.

 

[darkgen]

From what I recall, it has something to do with some TWUL assets not actually being owned by TWUL, so either a parent company or maybe a shell corporation sort of deal. I know many of the office buildings and similar were sold off and TW now merely rents them from someone else. There are also various entities with Thames Water in the name, but they're not the actual undertaking company. So while Corbyn may yet see his wet dream realised (all puns and euphemisms intended), it may be a case of the actual assets being more like DLC!

Heh; this continues to boggle the mind at how on earth such complexity was allowed by the regulator. But mandatory DLC! I like it. What a scam this continues to be.

 

[GreatAuk]

Ngl I feel like I have almost no understanding of the details of how Thames Water actually ended up in this situation, what means the company used to take out loans etc, how and why they structured themselves under a holding company etc, to what extent if any the current circumstances can be blamed on regulator interference or otherwise etc....

But the more I hear the more it does sound like an actual scam that has been allowed to persist for years under the nose of incompetent regulators and governments. And I've not heard anything that properly explains the issues from Thames Water's point of view in a way that holds up or comes close to justifying the pre-2017 dividends.

I think I'm relatively unfussed one way or the other when it comes to privatisation vs nationalisation of services (on the basis that if they are managed badly and if the government doesn't plan or regulate effectively then then they will fail badly regardless of who they are owned by, just as they can both succeed in the right circumstances). But the way water privatisation was done seems to have been much more of a scam than some other sectors, and I struggle to see how Thames Water's activities could be justified (although would be interested to read a 'steelman' version of their side of the story) even by the most ardent Tory.

 

[jeffk]

Heh; this continues to boggle the mind at how on earth such complexity was allowed by the regulator.

I doubt the regulator has the scope or the powers to deal with something like this.

 

[ttaskmaster]

Heh; this continues to boggle the mind at how on earth such complexity was allowed by the regulator. But mandatory DLC! I like it. What a scam this continues to be.

Most large-ish companies do something similar. It's not exactly unique to Thames or even the utilities industries.
It's the same as small businesses where the assets are privately owned by the directors, so the bailiffs can't seize them, except the (legal) corporate version is about keeping various finance pots separated and ring-fenced.

Thing is these companies have been operating illegally, so what legal grounds so the shareholders actually have especially if they knew about it. It might be possible to hold them partially responsible. If the government had some balls they would mug them off and play them at their own game.

It's not just shareholders who have a stake in TWUL, though. You have Kemble Water, various holding companies, parent companies and so on.
Additionally, many shareholders will have invested in Macquarrie, who manage that money by investing in things like Thames.

Ngl I feel like I have almost no understanding of the details of how Thames Water actually ended up in this situation, what means the company used to take out loans etc, how and why they structured themselves under a holding company etc, to what extent if any the current circumstances can be blamed on regulator interference or otherwise etc....

Thames did not take out loans. Macquarrie did, using Thames assets as security. The holding company side was brought in by Macquarrie.

But the more I hear the more it does sound like an actual scam that has been allowed to persist for years under the nose of incompetent regulators and governments. And I've not heard anything that properly explains the issues from Thames Water's point of view in a way that holds up or comes close to justifying the pre-2017 dividends.

Easy - Thames has no control over who gets the dividends. That again was done by Macquarrie, to its shareholders.
Not saying it's justified, as pretty much everyone below Exec pay grade was livid about it.

But the way water privatisation was done seems to have been much more of a scam than some other sectors, and I struggle to see how Thames Water's activities could be justified (although would be interested to read a 'steelman' version of their side of the story) even by the most ardent Tory.

Privatisation was great in theory, in the same way things like Marxism were, and it worked initially.... but the open and free nature (and/or the inept government) allowed corruption to sidle in and stick fingers in pies.
The ideal is public ownership, private investment, although that too requires a competent government.

 

[a1ex2001]

I've worked in the industry since 1996 and Thames Water are one of those in whom we have embedded consultants. We are intimately familiar with their inner workings and, being embedded, are treated/privity to the same insider knowledge as any direct employee.


The post-privatisation 1990s saw a complete turnaround, from the abject failure of the industry under previous governments (Labour and Tory in the 60s and 70s) to seeing massive investment and infrastructure improvements. It's only once things became decent that the likes of RWE and Macquarrie slimed their way in.


We used to have ^that... and it was an absolute **** show, with zero investment, miles of red tape, siloed working, contradictions and arguments over asset responsibility, widespread dissonance, highly inconsistent bill/pricing and a service so far below even current standards you couldn't imagine.
It's things like that which led to the consolidation of responsibility under the ten water authorities.


Increasing taxes to try and fix what the previous government ****** up is pretty common. This is basically the same thing, at this point.


Dividends... or loan repayments?
Most of the loans are bonded debt, which legally must be repaid.
TW shareholders have not been paid dividends for over 5 years, now.


CEO Steve Robertson was booted out of TW, supposedly over failed leakage targets, although the truth is more telling in regard to CEOs vs their executive board members and what happens when they try to take a more active role in sorting things out.
The issue is that it's not the CEOs who are the problem. They're little more than a figurehead. You want to look more closely at the executive team and the owners...


They could buy the company cheap and **** over the shareholders, yes. That was Corbyn's plan.
What they'll then stumble over are the billions in bonded loans, which they will still be legally obliged to repay, along with the costs of improving and then maintaining service. Without private investment, that will come down to public borrowing.

The combined debt of all water companies is I believe roughly the same as the combined dividend payout of all water companies (Thames have paid out approximately half the amount in dividends, but then think how much smaller there debt could be if they didn’t spend a quarter of their revenue servicing the 14bn they have racked up). The British public have been utterly stiffed by privatisation, giving a private company a monopoly on a basic need has proven to be most unsatisfactory unless you are a share holder or a foreign company happy to bleed the UK dry.