Thames Water’s path towards potential nationalization advanced as shareholders declined to extend a £500 million financial support.
The company, grappling with difficulties, was informed that it failed to meet the criteria for receiving the initial instalment of aid, which was part of its three-year revival strategy.
Anticipated to receive this substantial amount by March 31, the utility firm was left without the funds after shareholders, deterred by the regulatory demands rendering the company a challenging investment, decided against the contribution.
The management of Thames Water had been urgently working to secure a £750 million support package from investors during a board meeting on Wednesday. This effort was crucial to avoid the possibility of entering special administration, a situation exacerbated by significant debts and underperformance.
Lacking this additional investment, which includes contributions from the Canadian pension fund Omers and the Universities Superannuation Scheme, Thames Water faces the risk of needing support through taxpayer funds. The company requires several billion pounds for its survival.
Last year, Thames Water announced its investors’ agreement to infuse £3.25 billion into the business, expecting £750 million of this in 2024.
The CEO, Chris Weston, emphasized continuity in operations despite the setback: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water. Our 8,000 employees are dedicated to working with our supply chain partners to deliver our services for the benefit of our customers, communities, and the environment.”
Thames Water emphasized that operations were continuing normally, aiming to calm its 16 million customers amidst a year filled with concerns over the possibility of the company failing due to its over £14 billion debt.
The firm’s investors, such as the Ontario Municipal Employees Retirement System and the UK’s Universities Superannuation Scheme, had initially planned to supply the new equity by March 31. Thames Water operates with a regulatory capital valuation of £19 billion and has access to £2.4 billion in cash and liquidity resources. The company generates an annual regulated revenue of £2 billion and is guided by a newly appointed leadership team.
