London
CNN
—
Britain’s biggest water supplier said Wednesday it needed to raise more cash from investors, as UK media reported the government was preparing contingency plans to rescue the company.
Thames Water provides drinking water and waste water services to 15 million customers in London and the southeast of England. The utility, which counts one of Canada’s largest public pension funds among its top investors, has around £14 billion ($17.5 billion) of debt on its balance sheet.
News that it needs more money came just a day after CEO Sarah Bentley resigned with immediate effect after three years in the role. She was in the second year of an eight-year turnaround plan to address aging infrastructure, tackle leakage and reduce pollution in rivers, a legacy of underinvestment.
Thames Water received £500 million ($635 million) from shareholders in March, but said Wednesday it would need more.
The firm “is continuing to work constructively with its shareholders in relation to the equity funding expected to be required to support Thames Water’s turnaround and investment plans,” it added.
The company said it was keeping the water industry regulator Ofwat “fully informed” of its progress and added that it had a “strong liquidity position,” including £4.4 billion ($5.6 billion) of cash.
Ofwat said it was in “ongoing discussions” with Thames Water “on the need for a robust and credible plan to turn the business around.”
“We will continue to focus on protecting customers’ interests,” it added.
Government ministers, including representatives from the UK Treasury and the environment department, Defra, are holding emergency talks with Ofwat over Thames Water’s future, according to UK media reports.
One possibility would be to place the company into a special administration regime that effectively takes the firm into temporary public ownership. Sky News was first to report the discussions.
A government spokesperson told CNN: “This is a matter for the company and its shareholders. We prepare for a range of scenarios across our regulated industries — including water — as any responsible government would.”
The spokesperson added that the UK water sector “as a whole is financially resilient.”
Thames Water says about 24% of the water it supplies to customers is lost through leakage.
The company’s single biggest shareholder is the Ontario Municipal Employees Retirement System, which holds a stake of around 32%. The Universities Superannuation Scheme, a pension fund for the academic staff of UK universities, owns nearly 20%.
Other large investors include the Chinese and Abu Dhabi sovereign wealth funds, as well as British Columbia Investment Management Corporation, which invests on behalf of public sector workers.
