Shareholders have agreed to supply another £750 million of funding as the company struggles under a debt mountain (Picture: Shutterstock)
Shareholders in Thames Water have agreed to supply another £750 million of funding as the company struggles under a debt mountain.
But the utility giant warned it will need another £2.5 billion by 2030 in ‘significantly’ greater support for a turnaround in the coming years.
The company’s annual results revealed Thames Water was £14 billion in debt – up from £12.9 billion the previous year – and was on the brink of collapse.
Chief executive Sarah Bentley stepped down just weeks after being forced to give up her bonus over the company’s environmental performance.
The government has said it has ‘prepared for a range of scenarios’ in a set of contingency plans to take over if Thames Water goes under.
But in a desperate attempt to avoid nationalisation, the supplier says this initial funding agreement until the end of 2025 is a ‘major milestone – despite it being less than the £1 billion it expected.
Thames Water said any further support past 2025 ‘will depend on the finalisation of the business plan and the regulatory framework that will apply’.
The company’s annual results revealed Thames Water was £14 billion in debt and was on the brink of collapse (Picture: Shutterstock)
The firm is the UK’s biggest water supplier to 15 million people, serving households across London, the Thames Valley and the South East.
Interim co-chief executives Cathryn Ross and Alastair Cochran said: ‘This announcement is a major milestone for Thames and all our stakeholders.
‘The substantial equity support package announced today will underpin the delivery of a more focused turnaround plan that builds on the foundations that have been put in place over the last two years.’
Thames Water chairperson Ian Marchant said the new deal is ‘the largest equity support package ever seen in the UK water sector’.
It follows the £500 million already injected into the supplier in March this year.
Shareholders say the latest cash is dependent on ‘the preparation of a business plan that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements’.
Chief executive Sarah Bentley stepped down just weeks after being forced to give up her bonus over the company’s environmental performance (Picture: PA)
The company has come under fire in recent years over its poor performance in tackling leaks and sewage contamination.
MPs have warned the company is ‘too important to fail’ and if it does ‘the taxpayer is going to have to take it on’.
Labour’s Darren Jones, chair of the business and trade committee, previously told BBC Breakfast: ‘We saw this happen last year with the energy supply companies and we’re now unfortunately seeing it with the water companies.
‘It means that taxpayers will be exposed to the debt and the running costs for a very large company in Thames Water.
‘We saw again with the energy supply companies that we have to take on the cost of running these failed businesses, which is why it’s so galling for taxpayers when they see that regulators and ministers have failed to spot this problem before it all blew up.’
The company stressed it will ‘carefully monitor’ its progress on meeting conditions for the support and ‘keep under review pathways to ensure Thames Water’s continued financial resilience’.
‘In the meantime, Thames Water remains focused on delivering a safe and reliable service to its customers and the environment while work continues on implementing and accelerating the turnaround,’ it added in a statement.
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Shareholders have agreed to supply another £750 million of funding as the company struggles under a debt mountain.
