Thames Water in the dark as Burnham mulls embattled utility’s future
Thames Water and the group of creditors vying to buy it have had no engagement with Andy Burnham’s team as the incoming prime minister weighs whether to take full public control of the struggling utility, CityAM understands.
Burnham said earlier this year that Thames Water should be nationalised and has repeatedly called for greater public control of utilities. However, he has not clarified whether he will reject outright a private sector-led solution for Thames or whether he will place it in permanent or temporary public ownership.
In annual accounts published this week, the embattled water firm – which serves around 16m customers, mostly in London and the South East – said its cash supplies would run out some time in the fourth quarter of the year.
One of the options under consideration is placing Thames into special administration, which would mean it is temporarily taken into public control.
A rescue deal has also been tabled by a group of senior creditors including Elliott and Apollo, which would see them take over the company with the aim of eventually listing it on the London Stock Exchange. Their deal was rebuffed last month by Emma Reynolds, the environment secretary.
However, both Thames and the group of creditors have been left in the dark as to Burnham’s thinking and have had no engagement with his team, CityAM understands.
Thames chief executive Chris Weston said creditors were willing to provide additional funding to help the company avoid a cash crunch, but they wanted clarity on the new government’s position before committing further support.
“Creditors want to see what the new government thinks before doing anything further,” Weston told Reuters.
People close to the creditors and Thames played down reports that Burnham’s team would set out plans for nationalisation as soon as next week.
The creditor group believes it will have a chance to discuss its plans with the environment secretary once Burnham has appointed his cabinet, likely on Monday, CityAM understands.
A Thames Water spokesperson said: “We continue to work with all parties to reach an agreement that supports Thames Water’s long-term financial stability and ensures the uninterrupted delivery of our biggest infrastructure upgrade in 150 years while continuing to meet the needs of our 16 million customers.”
An Ofwat spokesperson directed CityAM to the Department for Food and Rural Affairs (Defra). A Defra spokeperson directed CityAM to Burnham’s team. Burnham’s spokesperson did not respond to requests for comment.
£18bn debt pile
Under the current terms of the deal proposed by creditors, the group would provide £3.4bn in equity investment and over £6.5bn in debt financing.
Some 30 per cent of the company’s existing debt owed to larger creditors would also be written off and dividends would not be paid for nine years, while existing fines would also be paid off.
Thames has become a symbol of Britain’s failing privatised water industry and has faced criticism for a string of sewage pollution incidents, a lack of investment and a swollen debt pile. In its accounts this week, Thames Water revealed its total net debt rose to £18.5bn, up from £16.8bn last year.
The water company said it is also on the hook for £123m after a record-breaking penalty issued by the industry watchdog for sewage spills and improper dividend payouts. It has agreed to a payment plan where 20 per cent was paid and the remaining balance is due by the end of March 2030.