About three weeks after announcing that it plans to close its two Cayman-domiciled subsidiaries, the U.K.-based Thames Water Utilities Ltd. issued roughly $162,500,000 in bonds through one of those entities, Thames Water Utilities Cayman Finance Ltd.
According to filings with the Irish Stock Exchange, the bonds yield an annual interest rate of 2.875 percent. Thames’ other Cayman-domiciled subsidiary, Thames Water Utilities Cayman Finance Holdings Ltd., was listed as one of the guarantors of the debt.
The issuance comes weeks after Thames stated that it would close its Cayman subsidiaries, stating that they bring “opacity” the its corporate structure. Thames has been criticized for its alleged lack of transparency, and officials in the country’s left-leaning Labour party have reportedly proposed nationalizing it and other U.K. private water companies.
In a statement sent to the Cayman Compass, Thames officials stated that they still plan to shutter the Cayman entities and establish a holding company in the U.K. in about six months. In the meantime, Thames may continue to use the subsidiaries to issue bonds, according to the officials.
Thames Finance Director Brandon Rennet explained that the Cayman entities will still be used because, “If we wanted to issue it through another vehicle, we would need the bondholders’ permission, which would take time.”
Even though restructuring Thames could cost in the “single-digit millions” of pounds, Thames stated that it is making the move in part because the Cayman entities have become “toxic.”
“Even if it’s entirely symbolic, there’s a point when you have to say it’s just time to reverse the noise,” stated Thames CEO Steve Robertson.
A publication that explains the Thames corporate structure states that its Cayman subsidiaries were established in 2007 to raise funds, and to work around U.K. regulations that were in place at the time.
The entities do not confer any tax advantages to Thames, according to company officials.
In October, another U.K. utilities company also announced that it is closing its three Cayman subsidiaries.
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.