By Sarah Young
LONDON (Reuters) -Thames Water promised “immediate and radical” action to turn around Britain’s biggest water utility, seeking to reassure that it has the financial resources to improve its performance after years of false starts and repeated sewage dumps.
Fears Thames Water could collapse under the weight of its 14 billion pounds ($17.7 billion) of debt prompted the government to prepare a rescue plan earlier this year, before the company’s financial investors agreed to invest more money.
Thames Water’s environmental record has also come under scrutiny. Investment is needed to improve the company’s ageing infrastructure and stop sewage releases, but previous turnaround attempts have taken too long, including an eight-year plan launched in 2021.
Accounts published on Tuesday showed its net debt had risen 7% to 14.7 billion pounds from the end of September last year, adding to worries over its finances.
But co-CEO Alastair Cochran said in an interview that the company, which supplies water to 15 million customers, more than a fifth of Britain’s population, was well-funded for its latest three-year plan which he called “structured and rigorous”.
“We’ve secured both the debt and equity we’ve needed in the past, we continue to secure the financing we need going forward, so I don’t see any reason to be concerned at this point,” he said.
POSTER CHILD FOR FAILURE
Thames Water has attracted political attention for years, and become a poster child for the failures of privatisation, after its performance deteriorated in the 2010s when its previous investors took out huge dividends.
Concerns resurfaced in recent days after media reports said that a 500 million pound equity injection from shareholders had actually added to Thames Water’s debt.
Cochran disputed that.
“I can tell you unequivocally this was equity,” he said. “It does not increase debt.”
Thames Water said on Tuesday that shareholders were supportive regarding the 750 million pounds of additional equity Thames Water needs in 2025, subject to certain conditions.
“Shareholders have reiterated their support for that, actually on the first of December, as part of these results so that’s very promising,” Cochran said.
Robert Goodwill, chairman of UK Parliament’s environment, food and rural affairs committee, said late on Monday that he may need to ask Thames Water bosses further questions about the company’s finances following the recent media reports.
Its results showed Thames Water’s revenues rose 11% to 1.2 billion pounds in the six months to the end of September, with underlying core earnings (EBITDA) up 22% to 627 million pounds.
($1 = 0.7924 pounds)
(Reporting by Sarah Young; Editing by Kate Holton and Barbara Lewis)