Thames Water Lenders Enlist EY as Debt Deadline Nears

As the looming deadline for £190 million in debt owed by Kemble Water, the parent company of Thames Water, approaches, a consortium of lenders has taken proactive steps by engaging the services of EY, a leading accountancy firm, to guide them through the negotiation process. Read more: Thames Water Lenders Enlist EY as Debt Deadline Nears

Mar 19, 2024 - 09:38

Thames Water Lenders Enlist EY as Debt Deadline Nears

Thames Water, the UK's largest water firm, is facing financial challenges due to its massive £18 billion debt burden as the water regulator, Ofwat, has told the firm it must secure additional funding independently, rather than relying on a taxpayer bailout.

As the looming deadline for £190 million in debt owed by Kemble Water, the parent company of Thames Water, approaches, a consortium of lenders has taken proactive steps by engaging the services of EY, a leading accountancy firm, to guide them through the negotiation process.

The group of financiers, owed the substantial sum by Kemble Water, the entity overseeing Thames’s regulated operations, has sought the expertise of the prominent accountancy firm amidst escalating concerns regarding the company’s financial stability.

With a £190 million facility set to either be repaid or extended by the end of April, the utility’s executives conveyed to MPs in December that the company was presently unable to fulfill this financial obligation.

The current status of negotiations with the pertinent lenders remains unclear, with the progress towards a favorable resolution yet to be determined as of Friday.

The specter of Thames Water’s solvency has lingered since last June, when reports surfaced indicating that Whitehall had commenced devising contingency plans in the event of the company’s collapse.

Serving 15 million customers across London and the southeast of England, Thames Water has faced mounting scrutiny in recent years due to issues ranging from leakages and sewage contamination to executive remuneration and shareholder dividends.

In addition to grappling with significant fines imposed by regulators, the utility has petitioned Ofwat for a suite of measures aimed at bolstering its financial position, including potential increases in consumer bills of up to 40% and deferment of capital expenditure plans.

EY declined to provide commentary on the matter.

In a separate development, a proposal has been put forth by a vehicle led by prominent City financier Edi Truell to Thames Water’s pension trustees. The proposition entails the removal of £1.7 billion in pension liabilities from the company’s balance sheet.

Pension SuperFund Capital, spearheaded by Mr. Truell, has outlined a structure for the arrangement that would not entail any direct cash outlay from Thames Water, according to insiders familiar with the matter.