Investors in Thames Water have agreed to put an extra £750 million ($962 million) of equity funding into the troubled utility to hold off a temporary takeover by the government.
Britain’s biggest water company said Monday that shareholders would provide the additional cash to support a turnaround plan running to March 2025, but warned that “significant additional funding” would be needed beyond that date.
“The additional investment announced today is the largest equity support package ever seen in the UK water sector and underscores our shareholders’ commitment to delivering Thames’ turnaround,” the company’s chairman, Ian Marchant, said in a statement.
The utility, which has a £14 billion ($17.9 billion) debt pile, anticipates that an extra £2.5 billion ($3.2 billion) of equity funding will be needed in the five years to 2030.
Although it has yet to secure those funds from shareholders, interim co-CEO Cathryn Ross said Thames Water was not at risk of being taken over by the government.
“We’re absolutely not close to that trigger,” Ross told BBC radio Monday. She was referring to the point at which the company would be placed into a special administration regime, a form of insolvency that ensures services to customers are maintained while the government tries to find a buyer for the business.
The company’s £4.4 billion ($5.6 billion) of cash and credit facilities are “absolutely enough to pay everything that we think we need to pay this year, next year and into the future,” Ross added.
Thames Water, which provides water and wastewater services to 15 million people in London and the southeast of England, has been at the center of a wider crisis in the sector.
Heavily indebted UK water companies are under growing financial pressure as interest rates soar, and they must also invest billions of pounds to upgrade aging infrastructure and tackle sewage spills and leakage.
Thames Water is currently in the second year of an eight-year turnaround plan to address years of underinvestment in infrastructure — but it appears investors want the company to sharpen its focus.
The utility said the further £750 million from shareholders was subject to certain conditions, including the preparation of a business plan that “underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders.”
The company has a track record of poor environmental performance. It reported nearly 8,000 sewage spills for the nine months to September 2022. Earlier this month, a British court slapped it with a £3.3 million ($4.2 million) fine for polluting a river in 2017.
— This is a developing story and will be updated.
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