Investors who support Thames Water have withdrawn £500 million in emergency funding amid a standoff with industry regulator Ofwat regarding proposed bill increases.
This development could heighten the chances of the financially strained company being taken into public ownership.
Thames Water revealed that its shareholders had refused to release the initial £750 million installment intended to secure its short-term cash flow, following the utility’s failure to meet specific conditions.
“Thames Water’s shareholders will not provide the first £500 million of the new equity anticipated by 31 March 2024,” stated Thames Water in a press release.
In July, Thames Water had secured £750 million in funding, with the first payment expected by March 31, subject to meeting certain conditions.
The UK’s largest water company further explained that it is currently engaged in discussions with Ofwat and other stakeholders.
“Thames Water aims to secure a PR24 regulatory determination that is affordable for customers, deliverable and financeable for Thames Water, as well as attractive for equity investors. Upon receipt of the draft PR24 determination (anticipated in May/June 2024), Thames Water intends to pursue all options to secure the necessary equity investment from new or existing shareholders.”
Thames Water did, however, highlight that it possesses “liquidity of £2.4 billion of cash and available committed facilities as of 29 February 2024.”
Chris Weston, CEO of Thames Water, reaffirmed the company’s dedication to serving its 15 million customers without disruption. “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.”
Following Thames Water’s announcement, Ofwat, which is set to publicly evaluate Thames Water and its peers’ business plans in June, responded that safeguards are in place to ensure uninterrupted services for customers despite challenges faced by Thames Water shareholders.
With Thames Water now needing to explore all avenues for additional equity to enhance company performance, the regulator emphasized the company’s significant regulatory capital value of £19 billion, £2.4 billion in liquidity, and an annual regulated revenue of £2 billion, alongside a newly appointed leadership team.
“We also need to see companies deliver the performance that customers expect and that they are run in a way that meets customers’ expectations,” stated Ofwat.
Thames Water’s crisis unfolds against the backdrop of alarming data revealing a significant surge in raw sewage discharges into rivers and seas this week.
According to a new report published by The Environment Agency, data for 2023 shows a 54% increase in the number of sewage spills compared to 2022.
Source :Thames Water
