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| Thames Water in race to find cash as problems get worse | Thames Water in race to find cash as problems get worse |
| (32 minutes later) | |
| Thames Water is in a race to find extra cash after its investors said they would not give the struggling water giant extra cash unless bills rise. | Thames Water is in a race to find extra cash after its investors said they would not give the struggling water giant extra cash unless bills rise. |
| The UK's largest water firm has been pushing for the regulator Ofwat to agree to a substantial increase in water bills over the next five years. | The UK's largest water firm has been pushing for the regulator Ofwat to agree to a substantial increase in water bills over the next five years. |
| Sources close to Ofwat say it plans to "stick to its guns" and won't raise bills to address shareholder problems. | Sources close to Ofwat say it plans to "stick to its guns" and won't raise bills to address shareholder problems. |
| Fears emerged last year that Thames could collapse due to its huge debts. | Fears emerged last year that Thames could collapse due to its huge debts. |
| Regardless of what happens, water supplies will continue as normal. | |
| The owners' drew up a turnaround plan last summer which asked for a 40% rise in bills over the next five years. But it is now thought that the shareholders may want to see even higher bill rises as a condition of injecting more money. | The owners' drew up a turnaround plan last summer which asked for a 40% rise in bills over the next five years. But it is now thought that the shareholders may want to see even higher bill rises as a condition of injecting more money. |
| Investors were due to pump in almost £4bn into the business over the next two years, but have withheld the first payment - due at the end of March - saying its turnaround plan is "uninvestible". | Investors were due to pump in almost £4bn into the business over the next two years, but have withheld the first payment - due at the end of March - saying its turnaround plan is "uninvestible". |
| The government has previously said it is ready to take over Thames Water, which it the UK's largest water company, in the event that it collapses. It serves 15 million households, mostly across London and parts of southern England. | The government has previously said it is ready to take over Thames Water, which it the UK's largest water company, in the event that it collapses. It serves 15 million households, mostly across London and parts of southern England. |
| The regulator insists that even without the additional capital, the Thames Water operating company will not need to be nationalised immediately as it is still generating enough money to keep it going day-to-day for up to 18 months. | The regulator insists that even without the additional capital, the Thames Water operating company will not need to be nationalised immediately as it is still generating enough money to keep it going day-to-day for up to 18 months. |
| However, at some point Thames will need to raise new money to finance the huge programme of investment that is needed and if the current shareholders - which include domestic and foreign pension funds as well as wealth funds from China and Abu Dhabi - won't inject cash, then Thames will need to find new ones. | |
| Sources close to the current owners say that unless Thames can pay a return - few people will find it an attractive investment. | Sources close to the current owners say that unless Thames can pay a return - few people will find it an attractive investment. |
| Speaking to the BBC, Chris Weston, chief executive of Thames Water, said he wanted to "reassure our customers that the business continue to operate as usual". | Speaking to the BBC, Chris Weston, chief executive of Thames Water, said he wanted to "reassure our customers that the business continue to operate as usual". |
| He said the company was "a long way" from nationalisation "at the moment". | He said the company was "a long way" from nationalisation "at the moment". |
| On a call with reporters, Mr Weston said that Thames Water aims come up with a plan that is acceptable to investors - who want higher returns - and Ofwat - which wants a sustainable business plan | |
| Chancellor Jeremy Hunt said the shareholder move "should not have an impact on the services received by customers" and that the company was still solvent. | Chancellor Jeremy Hunt said the shareholder move "should not have an impact on the services received by customers" and that the company was still solvent. |
| But he added that "there are parts of the country where the service has not been up to scratch, including in my own constituency". | But he added that "there are parts of the country where the service has not been up to scratch, including in my own constituency". |
| Thames Water is heavily indebted, with a large proportion of its £14.7bn debt pile having been run up when it was owned by Macquarie, an Australian infrastructure bank. | |
| Interest payments on the debt have also sharply increased. | Interest payments on the debt have also sharply increased. |
| Macquarie has said that it invested billions of pounds in upgrading Thames's water and sewage infrastructure while it owned the company. | |
| But critics argue that it took billions of pounds out of the company in loans and dividends - which is a share of a business's profits that is paid to shareholders. | But critics argue that it took billions of pounds out of the company in loans and dividends - which is a share of a business's profits that is paid to shareholders. |
| Along with many UK water firms, Thames Water has been in the spotlight for pumping sewage into rivers. | Along with many UK water firms, Thames Water has been in the spotlight for pumping sewage into rivers. |
| Between 2020 and the end of last year, it discharged at least 72 billion litres of sewage into the Thames. | Between 2020 and the end of last year, it discharged at least 72 billion litres of sewage into the Thames. |
| Thames Water has said it was planning to "upgrade over 250 of our sewage treatment works and sewers", and has built the Tideway Tunnel super sewer to divert 34 of the most polluting sewage outflows that have been discharging into the Thames. | Thames Water has said it was planning to "upgrade over 250 of our sewage treatment works and sewers", and has built the Tideway Tunnel super sewer to divert 34 of the most polluting sewage outflows that have been discharging into the Thames. |
| Ofwat said safeguards were in place to ensure that services to customers were protected "regardless of issues faced by shareholders of Thames Water", and said the sector had to be "fair to bill payers". | Ofwat said safeguards were in place to ensure that services to customers were protected "regardless of issues faced by shareholders of Thames Water", and said the sector had to be "fair to bill payers". |
| "The company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers. "We also need to see companies deliver the performance that customers expect and that they are run in a way that meets customers' expectations," it added. | "The company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers. "We also need to see companies deliver the performance that customers expect and that they are run in a way that meets customers' expectations," it added. |
| Related Topics | Related Topics |
| Companies | Companies |
| Thames Water | Thames Water |