UK’s Thames Water eyes Hong Kong’s CK Infrastructure as potential buyer amid court appeal

Thames Water is seeking to line up CK Infrastructure Holdings as a potential buyer for the utility if it is pushed into special administration following an appeal in a London court this week.

Thames wants to have the Hong Kong-based investor ready as an option for administrators to consider when looking to sell Thames further down the line in the event of an insolvency, according to people familiar with the matter.

If a court-led debt restructuring process fails, the UK government would take ownership of Thames through the special administration process, a temporary state-supervised process akin to insolvency designed for bankrupt businesses that provide critical services.

While Thames executives believe special administration is unlikely, having CK Infrastructure ready is part of the utility’s contingency plans, which Bloomberg reported were being worked out last week. If the company does fail, a decision about a buyer would be made by a court-appointed administrator and the government.

For Thames, having CK Infrastructure lined up in advance would shorten the time the company would be effectively nationalised in a process that is largely out of their hands. While for CK Infrastructure the process would probably drive down the price of becoming the utility’s majority owner. For the government, it would mean less time with the treasury shouldering the risk of running the company.