Senior management at troubled water company Thames Water have said that it does not currently have enough money to pay off a £190m loan due next April.
Thames Water serves 15 million households in England. Its new chairman, Sir Adrian Montague, has admitted that “this is a seminal moment”.
Sir Adrian was speaking before an Environment Committee grilling, and admitted that “an apology is in order”. Its parent company, Kemble Water, owes a staggering £18bn in debt.
Profits at Thames Water fell 54% in the first six months of this year, whilst complaints from customers rose 13%. A £500m cash injection, financed by a further loan to its parent company, was recently announced.
Its auditors, PwC, have warned that Thames Water may not continue as a going concern.
Thames has said that it will need a further £2.5bn investment in the coming years, but that is apparently dependent on Ofwat agreeing to a 40% increase on household bills, on top of inflation, by 2030.
Environment Committee member Barry Gardiner said that if Ofwat did not agree, it would open the floodgates and trigger a quasi-nationalisation of the company that would cost the taxpayer billions.
The chairman of UK’s largest private water company confessed that the £500m of cash invested by Thames shareholders was a “convertible note”, which carried interest of 8%, and could be converted into equity or shares at a later date.
Thames and Kemble are now owned by a group of British and Canadian pension funds, as well as the sovereign wealth funds of the Chinese and Abu Dhabi governments.
Ofwat, the water regulator, are seeking clarification of a £37.5m internal dividend paid to Kemble, and considering action over the payment. Sir Adrian said that “Kemble’s solvency is dependent on these payments”.
The question we’re asking here in the NTI newsroom, is would this eventually lead to a Special Administration if the taps are turned off?