Thames Water Will Learn Fate Next Week as Cash Is Running Out
(Bloomberg) — Beleaguered utility Thames Water will finally learn its future in less than 100 hours as any hopes for a rescue package rest with a London judge.
The company’s troubles follow decades of poor regulatory oversight across the sector. That allowed shareholders to pay themselves billions of pounds in dividends instead of using the money to improve badly needed infrastructure. Whatever the future, customers will end up footing the bill.
Early next week, Judge Thomas Leech will give his verdict on a £3 billion ($3.7 billion) emergency loan that would keep Thames afloat until the end of the year. While it would still only be a Band-Aid ahead of a major restructuring, a no would be disastrous, leaving the firm on the brink of collapse.
March 24 “is the date Thames says its coffers run dry, meaning the ability to execute the facility ahead of that date is urgent,” analysts at CreditSights Inc. said Friday in a note.
Britain’s largest water and sewage utility is saddled with more than £16 billion of debt.
Earlier Friday, Thames said it will appeal to the UK’s Competition and Markets Authority to examine a recent decision by the industry regulator on how much it’s allowed to charge customers and return to investors. Its latest attempt to get some wind in its sails is lengthy, costly and could be perilous.
Thames said that the watchdog’s decision — allowing bill hikes of 35% — “does not appropriately support the investment and improvement” required. Thames had sought an increase of more than 50%.
At the same time, the company is seeking fresh funds from equity investors. Only a few, including Castle Water Ltd. and Covalis Capital, have put forward concrete proposals. Others have been hesitant to commit to a rescue bid until there’s more clarity over the company’s balance sheet.
That means an increased risk of Thames plunging into special administration — a state-supervised process akin to insolvency designed for bankrupt businesses that provide critical services like water and energy to keep on operating.
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