Thames Water Investors Refuse $630 Million To Bolster Cash Flow; Renationalization More Likely

[hatrack]

Investors in Thames Water have pulled the plug on £500m of emergency funding amid a standoff with the industry regulator over attempts to raise bills, increasing the prospect that the heavily indebted company may be nationalised. The beleaguered utilities company said on Thursday that its shareholders had refused to provide the first tranche of £750m funding to secure its short-term cashflow, after the company had failed to meet certain conditions.

Britain’s biggest water company has been lobbying the regulator, Ofwat, to increase bills by 40%, pay lower fines for breaches and keep paying out dividends. The watchdog has been examining the company’s business plan for 2025 to 2030, and Thames said Ofwat’s initial assessments of the plan make the company “uninvestible” for shareholders. Michael Gove, the communities secretary, said Thames should not pass on higher bills to consumers. He added: “The leadership of Thames Water has been a disgrace. I think for years now we have seen customers of Thames Water taken advantage of by successive management teams that have been taking out profits and not investing as they should have been.”

EDIT

Ofwat is due to give its first public view on Thames and its peers’ business plans in June, at which point Thames is expected to attempt to secure extra equity from new and existing shareholders. Weston added that the company would continue to serve its 15 million customers as usual. The crisis for Thames Water comes after devastating data on the scale of raw sewage discharges into rivers and seas this week. Thames Water oversaw a 163% increase in the duration of sewage dumping into rivers as its creaking infrastructure failed to cope with rainfall levels.

Thames is also at the centre of a major investigation by the water regulator for England and Wales, Ofwat, into sewage dumping from its treatment works, which could lead to large financial penalties being imposed on the company. In July, Thames Water had agreed £750m of funding, with the first payment expected to be made on 31 March, contingent on conditions.

EDIT

https://www.theguardian.com/business/2024/mar/28/fresh-crisis-for-thames-water-as-investors-pull-plug-on-500m-of-funding

[marble falls]

1. Just another example of public services that should not be privatized ...

... how do we keep buying into the notion a company can provide lower cost, more dependable service at a smaller cost and still give out dividends to stockholders?

[Vogon_Glory]

2. The first obligation of private companies is not the public good

It is to make money for its shareholders and to repay outstanding debt to its creditors. This isn’t cosmic Marxist Commie thought—this is private enterprise in action. Putting money into decayed infrastructure does not enrich either shareholders or bond holders nor repays outstanding corporate debt.

For the benefit of lurking right-wingers, we are stating WHY privatized water systems are doing crummy jobs at taking care of their customers.