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Thames Water shareholders accuse Ofwat of withdrawing funding

Shareholders of struggling Thames Water have criticized Ofwat for failing to provide the “regulatory support” needed for the company’s recovery plan.

The nine shareholders said they were in talks with Thames Water and the regulator to try to find a solution to the “complex challenges” facing the company.

But in a statement they said: “After more than a year of negotiations, Ofwat is not prepared to provide the necessary regulatory support for a business plan that would ultimately address the issues facing Thames Water .

“As a result, shareholders are unable to provide additional funding to Thames Water.”

The water company serves almost a quarter of the UK’s population, but it is drowning under more than £15 billion of debt and the huge interest payments needed to keep it running.

Shareholders, including the Universities Superannuation Scheme (USS) and China’s sovereign wealth fund, had agreed to give it £750m of new equity, with the first £500m expected by the end of the month .

But on Thursday morning, Thames Water announced that shareholders would not inject the first £500 million, with regulatory provisions making the company’s business plan “non-investable”.

The utility company was seeking concessions, including a 40% increase in consumers’ water bills, loosening of capital spending requirements and greater leniency on upcoming regulatory sanctions.

Thames Water chief executive Chris Weston insisted on Thursday that it was business as usual, adding: “Our 8,000 employees remain committed to working with our supply chain partners to deliver our services to the benefiting our customers, communities and the environment. “.

Last summer, Sky News revealed that Whitehall officials had begun to develop emergency plans for Thames Water collapse amid fears he might not survive.

Ofwat said: “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 business’ performance for customers” .

Thames Water said it was in talks with Ofwat to secure regulations that were “affordable for customers, achievable and fundable for Thames Water, as well as investable for equity investors”.

It said that 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”.

Learn more:
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This comes after Sky News City Editor Mark Kleinman reported The company’s board of directors was in critical talks Wednesday evening, with the company’s survival in doubt.

Thames Water has come under intense pressure in recent years due to its poor record on leaks, sewage contamination, executive pay and shareholder dividends.

It faces multiple fines and regulatory investigations, including over the payment of dividends to Kemble Water, its parent company.

The company has also been plagued by management turmoil, with Sarah Bentley, its chief executive of three years, resigning last summer to be replaced by Mr Weston, the former boss of Aggreko.

Nearly £1.4 billion of the company’s bonds mature by the end of this year, with price controls by Ofwat meaning water companies have little room to generate additional revenue.

In total, tens of billions of pounds have been returned to shareholders of water utilities across Britain since privatization, stoking public and political anger over the sector’s frequent mismanagement.

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