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  • by Karma Loveday

Thames’ shareholders pull planned equity injection, arguing PR24 is “uninvestible”

Thames Water’s shareholders confirmed hours before the Easter weekend on 28 March that they would not now be providing £500m of equity by 31 March, as conditionally pledged in July 2023 as the first tranche of an AMP7 £750m support package.


The absence of regulatory arrangements that shareholders deemed acceptable prompted the backslide. A statement said: “Based on the feedback provided by Ofwat to Thames Water to date, the regulatory arrangements that would be expected to apply to Thames Water in AMP8 make the PR24 plan uninvestible.”


Thames' plan now is to continue discussions with Ofwat in the hope of securing an affordable, deliverable, financeable and investible draft determination in June, and at that stage to “pursue all options to secure the required equity investment from new or existing shareholders”.


A statement on behalf of all Thames’ shareholders openly blamed Ofwat for the funding hiatus: “Ofwat has not been prepared to provide the necessary regulatory support for a business plan which ultimately addresses the issues that Thames Water faces. As a result, shareholders are not in a position to provide further funding to Thames Water. Shareholders will work constructively with Thames Water, Ofwat and Government on how to address the consequences of Ofwat’s decision.”


Ofwat put the onus on the company to find a solution: "The company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers. Thames Water is a business with a regulatory capital value of £19bn, with £2.4bn of cash/liquidity available, and an annual regulated revenue of £2bn and new leadership team.”


Meanwhile CCW said: “Thames Water is already proposing a 56% bill rise after forecast inflation by 2030 and just 16% of its customers think these plans are affordable. Customers understand that investment is needed but they should not have to pay for Thames Water’s past failures – they’ve already paid a high price through the company’s poor complaints record and service levels.”


The £500m hole has fuelled further speculation about Thames’ future, including prospects for Special Administration (SAR) and re-nationalisation. Chief executive Chris Weston said: “We remain in a solid financial position and continue to maintain high levels of liquidity. While much speculation has been made about a special administration regime, today's announcement does not mean we are entering into a SAR.” 

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