This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.bbc.co.uk/news/business-66039170
The article has changed 17 times. There is an RSS feed of changes available.
| Version 8 | Version 9 |
|---|---|
| Thames Water in funding talks amid collapse fears | Thames Water in funding talks amid collapse fears |
| (32 minutes later) | |
| Thames Water is in talks to secure extra funding as the government says it is ready to act in a worst case scenario if the company collapses. | Thames Water is in talks to secure extra funding as the government says it is ready to act in a worst case scenario if the company collapses. |
| The water firm, which serves a quarter of the UK population, has billions in debt and is under pressure with its boss resigning unexpectedly on Tuesday. | The water firm, which serves a quarter of the UK population, has billions in debt and is under pressure with its boss resigning unexpectedly on Tuesday. |
| The government said "a lot of work is going on behind the scenes" and it had a process in place "if necessary". | The government said "a lot of work is going on behind the scenes" and it had a process in place "if necessary". |
| Regardless of what happens, water supplies will continue as normal. | Regardless of what happens, water supplies will continue as normal. |
| Even if the firm were to collapse, it would not happen imminently, the BBC understands. | Even if the firm were to collapse, it would not happen imminently, the BBC understands. |
| The UK's biggest water firm has been heavily criticised over its performance following a series of sewage discharges and leaks. Thames Water said it is trying to raise the cash it needs to improve. | The UK's biggest water firm has been heavily criticised over its performance following a series of sewage discharges and leaks. Thames Water said it is trying to raise the cash it needs to improve. |
| The company added that water regulator Ofwat was "being kept fully informed" on progress, and said it had "strong" reserves including £4.4bn of cash and borrowing it can draw on. | |
| The firm leaks more water than any other water company in UK, losing the equivalent of up to 250 Olympic size swimming pools every day from its pipes. | The firm leaks more water than any other water company in UK, losing the equivalent of up to 250 Olympic size swimming pools every day from its pipes. |
| Talks between the UK's biggest water company, ministers and Ofwat about contingency plans for the business were first reported by Sky News. | Talks between the UK's biggest water company, ministers and Ofwat about contingency plans for the business were first reported by Sky News. |
| If the firm cannot secure additional funding, it could be temporarily taken over by the government until a new buyer is found, in a special administration regime (SAR). This route was most recently taken with energy supplier Bulb after it ran into financial difficulties. | If the firm cannot secure additional funding, it could be temporarily taken over by the government until a new buyer is found, in a special administration regime (SAR). This route was most recently taken with energy supplier Bulb after it ran into financial difficulties. |
| Asked about the company in Parliament, environment minister Rebecca Pow said it was not her place to comment on the financial position of a company, but said water firms were "considered resilient". | Asked about the company in Parliament, environment minister Rebecca Pow said it was not her place to comment on the financial position of a company, but said water firms were "considered resilient". |
| "Ofwat is working very closely with Thames Water to ensure there is a viable business there," she added. | "Ofwat is working very closely with Thames Water to ensure there is a viable business there," she added. |
| Earlier Business Secretary Kemi Badenoch said she was "very concerned" by the situation, adding "we need to make sure Thames Water as an entity survives". | Earlier Business Secretary Kemi Badenoch said she was "very concerned" by the situation, adding "we need to make sure Thames Water as an entity survives". |
| She said her colleagues across government were "looking at what we can do". "I don't know too much about what the plans are going to be," she added. | She said her colleagues across government were "looking at what we can do". "I don't know too much about what the plans are going to be," she added. |
| Thames Water boss quits after sewage spills | Thames Water boss quits after sewage spills |
| Thames Water bosses forgo bonuses over poor service - BBC News | Thames Water bosses forgo bonuses over poor service - BBC News |
| On Tuesday, Thames Water's chief executive Sarah Bentley quit the business after just two years in the job. It came weeks after she was asked to forgo her bonus over the company's handling of sewage spills. | On Tuesday, Thames Water's chief executive Sarah Bentley quit the business after just two years in the job. It came weeks after she was asked to forgo her bonus over the company's handling of sewage spills. |
| The firm has not given a reason for her departure, but it comes amid questions over the company's financial stability. | The firm has not given a reason for her departure, but it comes amid questions over the company's financial stability. |
| Last year Thames Water's owners - a consortium of institutional investors - pumped £500m into the business and pledged a further £1bn to help turn things around. | Last year Thames Water's owners - a consortium of institutional investors - pumped £500m into the business and pledged a further £1bn to help turn things around. |
| But reports suggest the firm is struggling to raise the remaining cash which it needs to service its debt. Interest payments on more than half of its debt are linked to the rate of inflation, which has soared over the last year. | But reports suggest the firm is struggling to raise the remaining cash which it needs to service its debt. Interest payments on more than half of its debt are linked to the rate of inflation, which has soared over the last year. |
| Ms Bentley said Thames Water's poor record on sewage management was "symptomatic of the broader failing" at the company before her time. | Ms Bentley said Thames Water's poor record on sewage management was "symptomatic of the broader failing" at the company before her time. |
| "When we look back, we have decades of underinvestment which has led to cost-cutting and some poor decisions leaving the business in a really debilitating state," she told the BBC in March. | "When we look back, we have decades of underinvestment which has led to cost-cutting and some poor decisions leaving the business in a really debilitating state," she told the BBC in March. |
| An Ofwat spokesperson confirmed there were "ongoing discussions" with the firm about the need for "a robust and credible plan to turn the business around". | An Ofwat spokesperson confirmed there were "ongoing discussions" with the firm about the need for "a robust and credible plan to turn the business around". |
| Debt fears | Debt fears |
| Water companies have taken on large amounts of debt, collectively about £60bn, since they were privatised in 1989, with Thames Water's debt totalling £14bn. | Water companies have taken on large amounts of debt, collectively about £60bn, since they were privatised in 1989, with Thames Water's debt totalling £14bn. |
| Australian bank Macquarie which bought Thames Water in 2006, left it with £2bn extra debt after it sold its last share in 2017. | Australian bank Macquarie which bought Thames Water in 2006, left it with £2bn extra debt after it sold its last share in 2017. |
| Since 2016, profits have not covered the cost of paying interest on its debt, investment costs, and dividend payments, according to Russ Mould, investment director at AJ Bell. | Since 2016, profits have not covered the cost of paying interest on its debt, investment costs, and dividend payments, according to Russ Mould, investment director at AJ Bell. |
| As the Bank of England has raised interest rates as it tries to combat inflation, that interest bill is now rising, he said. | As the Bank of England has raised interest rates as it tries to combat inflation, that interest bill is now rising, he said. |
| There have been long-running concerns at Ofwat over Thames Water's ability to service that debt and raise the huge amounts of cash needed to modernise its infrastructure amid rising inflation and higher interest rates. | There have been long-running concerns at Ofwat over Thames Water's ability to service that debt and raise the huge amounts of cash needed to modernise its infrastructure amid rising inflation and higher interest rates. |
| To pay for the cost of improving its infrastructure to stop sewage leaks Thames Water needs to raise more money from investors. | |
| However, they have been reluctant to take on the extra risk, according to water expert Professor David Hall of University of Greenwich. | |
| He said the £500m of investment was the only time investors had put their own cash into the company since it was privatised in 1989, having instead raised cash for investment from customer bills. | |
| For the last five years, its owners have backed the decision not to pay any dividends to external shareholders. It has however paid dividends internally to its parent company. | For the last five years, its owners have backed the decision not to pay any dividends to external shareholders. It has however paid dividends internally to its parent company. |
| In the event the firm does collapse, it is likely to be put into special administration by the government. | |
| However, shareholders would be likely to lose money, rather than the public, Professor Hall said. | |
| Water bills have been on the rise, with the annual bill for an average household in England and Wales hitting £448 in April. | Water bills have been on the rise, with the annual bill for an average household in England and Wales hitting £448 in April. |
| Bills are set to rise again in 2025 by about £42 per household on average over a "long time frame", former Environment Secretary George Eustice said on Wednesday. | Bills are set to rise again in 2025 by about £42 per household on average over a "long time frame", former Environment Secretary George Eustice said on Wednesday. |
| It came after the Times reported bills could rise by as much as 40%, a figure Mr Eustice dismissed. | It came after the Times reported bills could rise by as much as 40%, a figure Mr Eustice dismissed. |
| "That figure [40%] is something that the industry has put out and it is probably because they are about to commence their negotiations with Ofwat and I think that the figure will be far lower than that when it comes to it," he told the BBC's Today programme. | "That figure [40%] is something that the industry has put out and it is probably because they are about to commence their negotiations with Ofwat and I think that the figure will be far lower than that when it comes to it," he told the BBC's Today programme. |
| Shadow energy secretary Ed Miliband said the situation at Thames Water was "an absolute scandal".Asked whether the company should be nationalised, he replied: "I don't think the answer to the water company's crisis is to pay out billions of pounds to shareholders, when that money could be going into sorting out what is happening in the water industry". | Shadow energy secretary Ed Miliband said the situation at Thames Water was "an absolute scandal".Asked whether the company should be nationalised, he replied: "I don't think the answer to the water company's crisis is to pay out billions of pounds to shareholders, when that money could be going into sorting out what is happening in the water industry". |
| Separately, Chancellor Jeremy Hunt met with regulators, including Ofwat, early on Wednesday. He told them that they needed to "work at pace" to ensure businesses reflected any falling costs in the prices they charged customers. | |
| "We've secured agreement with the regulators to act urgently in areas where consumers need most support to ensure they are treated fairly," Mr Hunt said. | |
| Also at the meeting were regulators from the energy, financial and communications sectors, to face questions about whether there is a profiteering problem and what they are doing to tackle it. | |
| Related Topics | Related Topics |
| Companies | Companies |
| Sewage | Sewage |
| Thames Water | Thames Water |