Thames Water to start fundraising talks in coming weeks amid cash crisis
Britain’s biggest water company currently has only enough funding to see it through to the end of May next year, and is scrambling for fresh cash.
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Thames Water has said it will kick off the process of raising more money from investors over the next few weeks.
The struggling water giant said that while it has been in talks with potential funders since July, it will launch its formal “equity solicitation process” in the coming weeks.
That process is expected to drag on beyond December, when regulator Ofwat publishes its final verdict on water firms’ proposed plans for raising consumer bills from 2025 until 2030.
Thames Water, which serves about 16 million people, is in the grip of a funding crisis, and has only enough cash to continue operating until May 2025.
It also has more than £15 billion of debt, and Ofwat has said it intends to appoint an independent monitor to supervise the company as it attempts a turnaround.
If Thames Water does not raise fresh cash, it faces a potential nationalisation next year, something the Labour Government has said it is keen to avoid.
Thames Water is also in talks with a group of roughly 90 of its creditors, who represent about £10 billion of its total debt.
The group, which includes large asset managers, hedge funds and pension funds, is also understood to be drawing up a plan to keep the company afloat.
A source close to the talks said Thames Water’s lenders are confident of finding a route for the company that would avoid it being nationalised, which would wipe out the value of their investments.
Thames Water is at the centre of a public row over steep proposed hikes to water bills, which have sparked outrage amid a growing crisis around firms’ polluting of waterways with sewage spills.
As of August 31, the company had about £1.57 billion in cash. However, £380 million of that is currently locked up as “reserves” under its current funding agreements.
It said on Friday that it has asked its creditors to allow it to access that £380 million, otherwise it will “enter standstill” by the end of December.
In that case, it would still have two further sources of potential funding to see it through to May.
One is in the form of £420 million of Class A and Class B “undrawn committed facilities”, which are a type of credit agreement.
Another is a £550 million pot of “undrawn reserve liquidity facilities”, it said.
All the funding combined will see it through to the end of May 2025. The fresh fundraising which it plans to start in the coming weeks is designed to extend beyond that point.