Thames Water asks for £2.4bn extra to keep away from going bust this 12 months or early 2027 | Thames Water

Thames Water has requested its collectors for an additional £2.4bn because the embattled water firm comes near working out of money.

The UK’s largest water firm mentioned on Thursday it wanted one other short-term money injection as a result of it will be unable to achieve a longer-term deal to type out its big debt pile earlier than working out of money by “the top of 2026 or the beginning of 2027”.

Thames Water mentioned in an announcement to the inventory market that it “doesn’t count on to finish its recapitalisation course of forward of this date”, that means it will run out of money with out collectors stumping up extra.

The utility firm serves 16 million clients in London and the Thames valley. However, it has been on the point of collapse for a number of years after it turned overwhelmed by a debt pile that’s now about £20bn. Its shareholders walked away, leaving the corporate below the efficient management of its collectors whereas they work out a deal to keep away from chapter.

The collectors gave Thames a £3bn lifeline in February last year to attempt to see it by means of negotiations on a deal to chop its money owed and inject more cash. The creditors, collectively called the London & Valley Water company, are led by a gaggle of American hedge funds similar to Elliott Management and Silver Point Capital, and institutional buyers together with BlackRock and M&G.

However, these talks have dragged on, and the water firm has now drawn down £2.65bn of the £3bn, leaving it perilously near working out of money even because it carries out a sequence of costly repairs and upgrades.

Thames mentioned the additional money would “lengthen […] liquidity into autumn 2027 and permit [it] to proceed to ship its capital programme and ship enhancements for patrons and the setting”.

Thames Water’s collectors have drawn up detailed proposals for a rescue plan that will contain them writing off £9.6bn in loans. However, that plan hinges on Ofwat agreeing to let the corporate pay set penalties for a number of years upfront, and successfully making a particular regime for the corporate. That prospect has confirmed politically unpalatable for the Labour authorities.

Some Labour politicians and environmental campaigners known as on Keir Starmer after which Andy Burnham to place Thames Water into particular administration, a type of momentary authorities management whereas a brand new purchaser is sought.

Burnham has pledged extra public management of the UK’s water trade, and has mentioned that public possession for Thames Water “is what should be done”.

In addition, the change of prime minister has led to regulatory uncertainty for the broader water trade. Starmer’s authorities had dedicated to implementing suggestions on modifications to the water system from the previous Bank of England deputy governor Sir John Cunliffe, however Burnham’s authorities has not but made clear what it plans to do.

Thames Water mentioned it “continues to work carefully with stakeholders to safe a market-led answer”.

Thames Water’s collectors are anticipated to vote on the proposals later within the month.