Thames Water to run out of money by end of the year
Thames Water is set to run out of cash by the end of the year as the UK’s largest private utility company struggles to secure a finalised rescue deal.
The embattled water firm – which serves around 16m customers, mostly in London and the South East – said in its latest financial report that it has £515m in cash, plus access to another £750 million in backup funding if needed.
But Thames Water confirmed this is only expected to last until some time in the fourth quarter of the year, meaning it will run out of liquidity by the end of 2026.
The forecast came after the firm recorded its highest ever spending in any single financial year at £2.7bn. The rise of investment, by around a fifth, came as it laid 88km of new pipes and cleared 1,700km of sewers.
But customer bills were not able to cover the costs of spending. The firm was hit with £1.1bn in cash outflows over the year.
Thames Water’s total net debt rose to £18.5bn, up from £16.8bn. This drove up its gearing – the ratio of its net debt to the regulatory value of its assets – to 86.1 per cent.
The water company is also on the hook for some £123m following a record-breaking penalty issued by the industry watchdog for sewage spills and improper dividend payouts. It has agreed to a payment plan where 20 per cent was paid and the remaining balance is due by the end of March 2030.
Thames Water’s latest report showed it had only met 55 per cent of its regulated targets in the last year, whilst customer complaints were up 101 per cent.
Government rejected Thames Water rescue deal
Environment secretary Emma Reynolds rejected a rescue deal proposed by lenders that would provide some £3.4bn in equity investment and £6.5bn in debt financing.
Morning Wire revealed earlier this month Reynolds had never met with the investors behind the deal, that include financial giants Apollo, Silverpoint Capital and Elliott Management, before dismissing it.
Reynolds raised concern in a letter to Ofwat that the deal offered may not leave water and wastewater systems “adequately protected”.
The utilities firm has been on the brink of a special administration regime (SAR), which would see it nationalised on a temporary basis.
Prime Minister-in-waiting Andy Burnham has been vocal of his desire for “greater public control” over the nation’s top utility firms, though has suggested this could work in “partnership” with the private sector.