Thames Water shareholders refuse to inject more cash into ‘uninvestable’ company

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Shareholders have backed out of plans to inject the primary £500m of funding into troubled utility Thames Water as trade laws make its marketing strategy “uninvestable”.

Thames Water – the UK’s greatest water provider with 15 million households throughout London and the South East – mentioned the funding plan drawn up final July was topic to circumstances, together with a marketing strategy that’s supported by “appropriate regulatory arrangements”.

The company has been battling to safe its future since final summer time, with a funding disaster leaving the debt-laden agency getting ready to emergency nationalisation.

They have been left with money owed of almost £15bn, whereas it has additionally missed sewage spill and leakage targets with the bosses coming beneath intense scrutiny over the agency’s efficiency.

This contains shareholder payouts, with Thames Water agreeing to pay a £37.5m dividend in October final 12 months.

Last summer time, a rescue funding plan was agreed with shareholders, together with a Canadian pension fund and China’s sovereign wealth fund, that might see them pump in £750 million, with the primary £500 million due by the top of this month.

But it’s understood that Ofwat has refused to bow to the water big’s calls for for concessions, mentioned to embody a 40% invoice hike for patrons, an easing of capital spending necessities in addition to leniency on regulatory penalties.

However, the agency has now mentioned the laws being imposed by trade watchdog Ofwat “make the PR24 plan “uninvestible”, and consequently the shareholder assist letter from final July “has not been satisfied”.

“The first £500 million of the new equity that had been anticipated will not be provided by Thames Water’s shareholders by 31 March 2024,” it revealed.

Thames Water mentioned it was in ongoing talks with trade regulator Ofwat to safe laws which might be “affordable for customers, deliverable and financeable for Thames Water, as well as investible for equity investors”.

It mentioned as soon as the brand new regulatory plan is agreed with Ofwat, it “intends to pursue all options to secure the required equity investment from new or existing shareholders”.

Chris Weston, chief govt of Thames Water, mentioned: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water.

“Our 8,000 staff remain committed to working with our partners in the supply chain to provide our services for the benefit of our customers, communities and the environment.”

Ofwat have now mentioned the water company should now search additional funding for its turnaround plan, however sought to guarantee that “safeguards” have been in place to defend providers to households.

An Ofwat spokesman mentioned: “Safeguards are in place to ensure that services to customers are protected regardless of issues faced by shareholders of Thames Water.

“Today’s update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers.”

He added: “Thames Water is a business with a regulatory capital value of £19 billion, with £2.4 billion of cash/liquidity available, and an annual regulated revenue of £2 billion and new leadership team.”

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