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 situations, together with a marketing strategy that’s supported by “applicable regulatory preparations”.
The corporate 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’ve been left with money owed of practically £15bn, whereas it has additionally missed sewage spill and leakage targets with the bosses coming below 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.
Final summer time, a rescue funding plan was agreed with shareholders, together with a Canadian pension fund and China’s sovereign wealth fund, that may see them pump in £750 million, with the primary £500 million due by the tip of this month.
However it’s understood that Ofwat has refused to bow to the water large’s calls for for concessions, mentioned to incorporate a 40% invoice hike for purchasers, an easing of capital spending necessities in addition to leniency on regulatory penalties.
Nonetheless, the agency has now mentioned the laws being imposed by trade watchdog Ofwat “make the PR24 plan “uninvestible”, and in consequence the shareholder help letter from final July “has not been glad”.
“The primary £500 million of the brand new fairness that had been anticipated is not going to be offered 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 can be “reasonably priced for purchasers, deliverable and financeable for Thames Water, in addition to investible for fairness buyers”.
It mentioned as soon as the brand new regulatory plan is agreed with Ofwat, it “intends to pursue all choices to safe the required fairness funding from new or present shareholders”.
Chris Weston, chief govt of Thames Water, mentioned: “I’d prefer to reassure our prospects that, regardless of this announcement, it’s enterprise as normal for Thames Water.
“Our 8,000 workers stay dedicated to working with our companions within the provide chain to offer our companies for the good thing about our prospects, communities and the setting.”
Ofwat have now mentioned the water firm should now search additional funding for its turnaround plan, however sought to guarantee that “safeguards” have been in place to guard companies to households.
An Ofwat spokesman mentioned: “Safeguards are in place to make sure that companies to prospects are protected no matter points confronted by shareholders of Thames Water.
“Immediately’s replace from Thames Water means the corporate should now pursue all choices to hunt additional fairness for the enterprise to show across the efficiency of the corporate for purchasers.”
He added: “Thames Water is a enterprise with a regulatory capital worth of £19 billion, with £2.4 billion of money/liquidity accessible, and an annual regulated income of £2 billion and new management crew.”
In a joint assertion, Thames Water’s 9 buyers claimed that Ofwat had “not been ready to offer the required regulatory help” for his or her funding and turnaround plan.
They insisted their funding settlement “was an answer which addresses the foundation reason behind Thames Water’s challenges with out the necessity for any taxpayer funding”.
They added: “Nonetheless, after greater than a 12 months of negotiations with the regulator, Ofwat has not been ready to offer the required regulatory help for a marketing strategy which in the end addresses the problems that Thames Water faces.
“Consequently, shareholders will not be able to offer additional funding to Thames Water.”
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