Thames Water reveals plan to avoid nationalisation
The company aims to raise up to £3 billion
Thames Water, which supplies millions of homes across London, has revealed a proposal to secure up to £3 billion in new cash from creditors, as it seeks to bolster its finances and avoid the threat of nationalisation.
The struggling utilities giant has put forward the deal amid continued efforts to restructure its significant debt pile.
Chief executive of the water supplier, Chris Weston, said the transaction would deliver "further progress to put Thames Water onto a more stable financial footing as we seek a long-term solution" to its financial troubles.
It said it only has £500 million in cash to support the company, as well as another £500 million for its reserves and compensation payments.
Thames Water, which serves about 16 million people, is in the grip of a funding crisis and previously said it only has enough cash to continue operating until May 2025.
It also has more than £15 billion of debt, and regulator Ofwat has said it intends to appoint an independent monitor to supervise the company as it attempts a turnaround.
However, on Friday it said it has brokered a deal with some of its creditors for the transaction to "extend its liquidity runway".
It said the deal would involve an initial £1.5 billion, supported by a number of its creditors.
There would be capacity for a further £1.5 billion, across two tranches of £750 million, if Thames Water makes an appeal to the Competition and Market Authority (CMA) regulator over its final determination for the water sector.
How much will our bills go up by?
The CMA is expected to confirm in December how much it will allow water companies to increase their bills by over the next five years.
Water firm have requested increases which would see the average consumer bill in England and Wales rise by 40% between now and 2030, costing £615 per year.
Thames Water has called for its customers to face a 53% increase.
Chairman of Thames Water, Sir Adrian Montague, said: "The board and leadership team remain focused on stabilising the business, and today's announcement is an important step in the process to increase its long-term financial resilience.
"There will be further stages and we will continue to work collaboratively with our many stakeholders as we look to attract new equity into the business and seek a final determination that enables the delivery of our ambitious business plan for the next five years."
Mr Weston added: "We are working closely with and have the support of our creditors, enabling Thames to continue to implement our turnaround plan so that we can deliver better results for our customers and the environment whilst seeking to attract new capital into the business.
"In the meantime, our teams on the ground continue to supply our services to our 16 million customers every day."