UK-based Thames Water set to close Cayman subsidiaries

The U.K.-based Thames Water Utilities Ltd. announced last week that it will soon close its two Cayman-based subsidiaries.

The announcement was made last week when the utilities company stated that its new chairman, Ian Marchant, will be leading a review of Thames’ corporate structure and governance to ensure that it is as simple and transparent as possible for customers and stakeholders.

“As a first step, Thames Water is announcing that it intends to close its Cayman Islands subsidiaries,” the announcement states. “These have always been fully registered in the U.K. for tax purposes, but no longer serve their original purpose of enabling smoother access to the global bond markets.”

The announcement comes after the company denied reports in August that it was planning to shutter the Cayman entities as part of an effort to repair its reputation.

“We haven’t turned our back on the Cayman; we have a couple registered entities there,” Thames public relations consultant Sundeep Tucker told the Compass at the time. “They may open more [entities] in the Caymans or they may close it down.”

Thames’ annual reports state that the utilities company, which serves about 25 percent of the populations in England and Wales, has two subsidiaries in Cayman: Thames Water Utilities Cayman Finance Holdings Ltd., and Thames Water Utilities Cayman Finance Ltd.

A publication that explains the company’s corporate structure states that they were established in 2007 to raise funds, and to work around U.K. regulations that were in place at the time.

“In 2007, it was not possible for a U.K. company to issue public bonds to repay debt provided by investors to help finance its acquisition,” the publication states. “These restrictions have now largely been amended or removed.”

Last month, another U.K. utilities company announced that it is closing its Cayman subsidiaries – Yorkshire Water Services Bradford Finance Ltd., Yorkshire Water Services Odsal Finance Ltd., and Yorkshire Services Odsal Finance Holdings.

Yorkshire Water, the country’s fifth-largest water company, said it is closing its Cayman entities due to issues of “public concern.”

“There is a real challenge to the water industry’s legitimacy at the moment, and complex financial structures only add to public concern as to the way in which companies are financed,” stated Yorkshire Director of Finance Liz Barber in an October press release.

“We have some offshore companies in our structure which are no longer necessary or appropriate and we’re taking steps to remove these as soon as possible.”