Thames Water secures additional £750m from shareholders and rules out nationalisation | Business News

Thames Water says it has secured a dedication for an extra £750m funding by shareholders and declared it’s in no hazard of being positioned in non permanent public possession.

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

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

The £750m injection, which took the funding spherical whole to £1.25bn, falls wanting the £1.5bn sum that the water regulator had mentioned Thames was in search of final week.

Sky Information revealed final month how the federal government was drawing up contingency plans for the company’s collapse amid rising doubts about its means 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 latest months by tapping shareholders for additional cash.

It was understood on Saturday {that a} commitment to provide new equity had been secured from a lot of traders, although the response to the plea for additional cash was non-binding.

The request for contemporary cash, by way of an fairness help 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 non permanent public possession – as occurred to vitality 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 vitality and chemical prices.

It’s an industry-wide drawback.

On the identical time, corporations 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 might not be paying dividends till at the least 2025 following an additional 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.

It was planning to lift an extra £2.5bn from 2025.

Interim co-chief executives, Cathryn Ross and Alastair Cochran, mentioned the evaluation of its turnaround plan was persevering with however signalled there was no menace of being positioned in particular administration.

Ms Ross advised BBC Radio 4 “We will entry £4.4bn of money and credit score services”.

“It was a particularly difficult 12 months for Thames Water and the water {industry}”, the pair wrote.

“Our community got here beneath unprecedented stress from document temperatures, a drought and a freeze / thaw occasion. On the identical time, financial components additionally impacted our monetary outcomes with excessive inflation pushed by a surge in vitality and chemical costs.

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

“Regardless of this, we’re in a sturdy monetary place. We had £4.4bn liquidity as at 31 March 2023 and are extraordinarily lucky to have such supportive shareholders.

“Their dedication to delivering Thames’ turnaround and life’s important service is mirrored within the largest fairness help 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 now have additionally elevated funding in our networks and belongings to document ranges as we undertake an in depth evaluation of our ageing Victorian asset infrastructure to find out what must be executed to enhance operational resilience and efficiency over the long-term.”