Thames Water secures extra £750m from shareholders in race to keep away from nationalisation

Thames Water says it has secured a dedication for a further £750m funding by shareholders, because the debt-laden firm races to keep away from the potential for being positioned in short-term public possession.

The nation’s largest provider used the publication of delayed annual accounts, which confirmed a leap in financing prices, to announce additional progress in its bid to boost money to shore up its funds.

However, Thames admitted the brand new fairness was depending on traders agreeing a brand new marketing strategy.

The quantity additionally fell in need of the £1.5bn sum that the water regulator had mentioned Thames was in search of final week.

Sky News revealed final month how the federal government was drawing up contingency plans for the corporate’s collapse amid rising doubts about its capability to service a £14bn debt pile.

Thames Water, which argues it has robust liquidity, has been locked in efforts to shore up its funds over current months by tapping shareholders for extra cash.

It was understood on Saturday {that a} dedication to supply new fairness had been secured from plenty of traders, although the response to the plea for extra cash was non-binding.

The request for recent cash, through an fairness assist letter, was believed to have been demanded by auditors as a situation of signing off the corporate’s accounts on a going concern foundation.

They confirmed Thames spent £476.5m servicing its money owed over the 12 months to 31 March. It made an underlying loss after tax of £132.3m.

Thames is dashing to keep away from the potential for being positioned right into a particular administration regime that will successfully take the corporate into short-term public possession – as occurred to power supplier Bulb in 2021.

Amid criticism of previous dividend flows, its monetary place has been worsened by rising rates of interest to which many debt repayments are linked, together with rising power and chemical prices.

It is an industry-wide downside.

At the identical time, companies are beneath stress to bolster service efficiency following years of weak funding in infrastructure that has led to widespread anger over leaks and sewage dumps into rivers and the ocean.

On Friday, Southern Water revealed it will not be paying dividends till not less than 2025 following an extra credit standing downgrade.

Thames, which paid no dividends in its final monetary 12 months, mentioned it had met solely 55% of its annual efficiency commitments.

Interim co-chief executives, Cathryn Ross and Alastair Cochran, mentioned the assessment of its turnaround plan was persevering with.

“It was an extremely challenging year for Thames Water and the water industry”, they wrote.

“Our network came under unprecedented pressure from record temperatures, a drought and a freeze / thaw event. At the same time, economic factors also impacted our financial results with high inflation driven by a surge in energy and chemical prices.

“In quick, our efficiency was not as we – or our clients – wished it to be.

“Despite this, we are in a robust financial position. We had £4.4bn liquidity as at 31 March 2023 and are extremely fortunate to have such supportive shareholders.

“Their dedication to delivering Thames’ turnaround and life’s important service is mirrored within the largest fairness assist bundle ever seen within the UK water sector, while taking no dividends out.”

They added: “We’re fixing extra leaks and buyer complaints have continued to fall considerably. We have additionally elevated funding in our networks and property to document ranges as we undertake an in depth assessment of our ageing Victorian asset infrastructure to find out what must be achieved to enhance operational resilience and efficiency over the long-term.”