Thames Water races to safe investor backing forward of delayed accounts

Britain’s greatest water firm is that this weekend corralling its shareholders to assist a serious capital injection because it prepares to publish delayed annual accounts.

Sky News has learnt that Thames Water has secured backing from buyers together with Omers, the Canadian pension fund, and the Universities Superannuation Scheme (USS) for a dedication to offer new fairness.

Further particulars are anticipated to be introduced to the inventory market on Monday morning, based on insiders.

The dimension of the proposed preliminary equity-raise was unclear on Saturday though one supply mentioned it was unlikely to be larger than the £1bn which shareholders had already indicated they’d present final 12 months.

The fairness assist letter is non-binding – that means shareholders may but change their minds – however is known to have been seen as a situation of Thames Water’s auditor, PricewaterhouseCoopers, signing off the corporate’s accounts on a going concern foundation.

A earlier letter of this nature was cited within the firm final September, when it mentioned shareholders had “further evidenced their support for [Thames Water] and its business plan through an Equity Support Letter where the shareholders have committed to hold investment committee meetings (for their respective institutions) as a path to obtaining approval (in the discretion of the investment committee) for funding their pro rata share of conditional commitments in respect of the further £1bn of additional equity which is assumed in TWUL’s business plan.

“Whilst this isn’t a authorized dedication to fund… the [Thames Water] board believes it’s cheap to include this extra £1bn of fairness funding in its evaluation.”

It was not clear whether or not the most recent written assist was materially totally different to that offered almost a 12 months in the past.

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

Industry sources imagine it’ll now require an unlimited debt-for-equity swap with a view to avert momentary nationalisation.

David Black, the Ofwat chief govt, instructed member of the House of Lords this week that state possession remained a good distance off however acknowledged that Thames Water would in all probability search to hike buyer payments.

Any momentary nationalisation would contain putting Thames right into a particular administration regime (SAR) akin to that used when the vitality provider Bulb collapsed in 2021, sparking issues that it may value taxpayers billions of kilos.

Ultimately, the Bulb administration value the general public purse a much smaller sum, however water trade possession restrictions which forestall consolidation imply this determine might be dwarfed if Thames Water was to fail.

Thames Water serves 15m clients throughout London and the south-east of England, and has come below intense strain lately due to its poor report on leaks, sewage contamination, govt pay and shareholder dividends.

This week, it was fined £3.3m for discharging uncooked sewage into river water close to London Gatwick Airport.

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The firm has been beset by administration turmoil, with Sarah Bentley, its chief govt for the final three years, resigning lower than two weeks in the past.

It has since parachuted the City grandee Sir Adrian Montague in as its chairman, with Monday as a result of be his first day within the position.

The monetary peril through which Thames Water finds itself has sparked calls from critics of the privatised trade to renationalise the entire UK’s main water corporations.

Thames Water is owned by a consortium of pension funds and sovereign wealth funds, a few of which have been privately sceptical about delivering extra funding.

Its largest shareholder is Ontario Municipal Employees Retirement System (Omers), a Canadian pension fund, which holds a stake of almost 32%.

Others embody China Investment Corporation, the nation’s sovereign wealth fund; the Universities Superannuation Scheme, the UK’s greatest non-public pension fund; and Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority.

Hermes, which manages the BT Group pension scheme, can be a shareholder.

Thames Water employs about 7,000 folks, and serves almost 1 / 4 of Britain’s inhabitants

Nearly £1.4bn of the corporate’s bonds mature by the tip of subsequent 12 months, with Ofwat value controls that means water corporations have little scope to generate extra earnings.

Read extra:
Pressure on ‘rip off’ water trade unlikely to go away any time quickly
Ministers weigh contingency plan for collapse of Thames Water

In whole, tens of billions of kilos have been handed to shareholders in water utilities throughout Britain since privatisation, stoking public and political anger given the trade’s frequent mismanagement.

Thames Water was contacted for touch upon Saturday afternoon whereas a spokesman for its main shareholders declined to remark.