- Capital Requirement: Ofwat Likely to Seek More Investment for Crisis-Hit Thames Water
- Investor Concerns: Thames Water Struggles to Secure £1 Billion Funding for Turnaround
- Financial Challenges: Regulator Anticipates Substantial Investment Needed for Thames Water’s Future
Ofwat’s CEO informed the Lords Industry and Regulators Committee that shareholders may not provide enough funding.
The regulator of the water industry has acknowledged that investors in crisis-stricken Thames Water have become “more concerned about the company’s turnaround” as it seeks £1 billion to shore up its immediate financial future.
David Black, the chief executive officer of Ofwat, told a Lords committee that while negotiations were ongoing, new shareholders may need to be sought if the required investment falls short of “substantial” quantities.
However, he added that Thames presently had £4 billion in available funds.
Ofwat and government officials prepared for the company’s likely demise, and the regulator’s sector monitoring was scrutinised.
A day earlier, it was reported that Sarah Bentley, the CEO of Thames, had resigned with immediate effect.
Thames Water, which serves 25% of the UK, needs partners to repay its £14 billion debt.
Customers have been reassured that their supplies and bills are not in jeopardy, but years of negative press regarding shareholder dividends, executive pay, leaks, and sewage contamination have undermined confidence in the company’s management.
On Tuesday morning, Thames was fined £3.3 million for a 2017 sewage discharge that caused the fatalities of 1,400 fish.
Mr. Black, commenting on the state of the company’s deteriorating finances, acknowledged that higher costs for items such as energy had taken an additional toll on Thames and the industry as a whole, but acknowledged that the problems were most severe at Thames.
He said the company had secured £500 million but needed £1 billion through a revised recovery plan devised with investors.
It may be necessary for Thames to seek out new shareholders, he added.
Mr. Black said that the agency expected more than £1 billion, but he did not specify.
He told the industry and regulators committee, “We need to see their revised business plan. But we believe it’s a substantial amount of money.”
