Thames Water scrambles to find cash after investors pull funding
The firm revealed that its investors had withdrawn a £500 million funding lifeline that was due to be paid at the end of this month.
Thames Water bosses have admitted the firm could face the risk of emergency nationalisation as its funding crisis deepens after shareholders refused to give the troubled utility extra cash.
The group – the UK’s biggest water supplier with 16 million households across London and the South East – revealed that its investors had pulled a £500 million funding lifeline that was due to be paid at the end of this month.
Thames Water blamed Ofwat, claiming that the regulator had made its business plan “uninvestible”.
The debt-laden firm’s chief executive, Chris Weston, admitted that if no alternative funding could be found by the end of next year, then it could face the prospect of a special administration – which would likely see the taxpayer pick up the bill.
Thames Water stressed that it had £2.4 billion of cash currently available to it, which should see it meet funding needs for the next 15 months.
Mr Weston said there was a risk of nationalisation if funding was not secured after this, but added “we are a long way from that point at the moment”.
Chancellor Jeremy Hunt said the Treasury would monitor Thames Water’s situation “very carefully” after the funding revelations.
Asked by broadcasters if the Government was ready to step in to support Thames Water customers if necessary, the Chancellor added: “Our understanding is that the company is still solvent and today’s news should not have an impact on the services received by customers.
“Obviously, there are parts of the country where the service has not been up to scratch … overall we will continue to watch the situation very carefully.”
Labour called on the Government to “stabilise” Thames Water but stopped short of making a plea for it to be nationalised.
Meanwhile, the GMB union accused Thames Water of “blackmailing” Ofwat and customers and said it was meeting with bosses at the firm on Thursday.
Gary Carter, GMB national officer, said: “Holding bill payers to ransom for costs after years of underinvestment is completely unacceptable.”
Thames Water has been battling to secure its financial future since last summer, with a funding crisis leaving the firm on the brink of emergency nationalisation.
But Thames Water said the funding plan was subject to conditions, including a business plan that was supported by “appropriate regulatory arrangements”.
In a joint statement, Thames Water’s nine investors claimed that Ofwat had “not been prepared to provide the necessary regulatory support” for their funding and turnaround plan.
Thames Water said it was in ongoing talks with Ofwat to secure regulations that were “affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors”.
It said once the new regulatory plan was agreed with Ofwat, it “intends to pursue all options to secure the required equity investment from new or existing shareholders”.
He said the group “will continue to provide our services to our 16 million customers”.
Ofwat said Thames Water must now seek further funding for its turnaround plan, but sought to assure that “safeguards” were in place to protect services to households.
Thames Water is ring-fenced from its holding company Kemble, which has a £190 million loan due for refinancing next month – a debt that the group has already warned it will not be able to repay.
Thames Water has been left with debts of nearly £15 billion, while it has also come under intense scrutiny after missing sewage spill and leakage targets.
