Thames Water’s largest investor has reduced its valuation of its stake in the company to zero, effectively declaring the utility provider worthless, according to a report by The Telegraph.
The Canadian pension fund Omers has executed a “full write down” of its investment in Thames, just a day after pulling its representative from the company’s board. This write-down signifies a total loss for Omers, which previously assessed its 31.7% share in Thames’ parent company, Kemble, at £700 million at the end of 2022.
Documents from a Singapore-based entity owned by Omers show a dramatic revision of this valuation. In December, Omers Farmoor Singapore PTE valued its Kemble stake at approximately £260 million, reflecting a 62.8% decrease over the previous financial year.
The valuation plummeted to zero following Omers and other shareholders’ decision to cease funding to the business, deeming it “uninvestable.” This decision led to Kemble defaulting on substantial debt obligations earlier this year. While lenders have not yet taken formal action against these defaults, it has prompted Omers to acknowledge a complete write-down of its investment.
These developments add to the dire circumstances facing Thames Water, which is struggling with an £18 billion debt load. The government is reportedly preparing contingency plans that could involve significant taxpayer expense should the company fail.
Omers’ move to drastically reduce the valuation of its stake in Thames Water will prompt scrutiny among other shareholders, such as the Universities Superannuation Scheme (USS).
This UK pension fund, with over 500,000 members and holding almost 20% of Thames Water, had already decreased the value of its investment by nearly two-thirds.
Thames Water, burdened with an estimated £18 billion in debt, must persuade Ofwat, the regulator, next month that its rescue plan is viable to avoid being nationalized through special administration.
The utility company has reportedly proposed a 56% increase in consumer bills over the next five years as a component of this plan.
