(qlmbusinessnews.com Wed, 13th Dec, 2023) London, UK —
“Thames Water in Deep Financial Waters: Chairman Admits £190 Million Loan Repayment Struggle”
Thames Water, serving 15 million households, is grappling with a severe financial crisis, unable to meet a looming deadline for the repayment of a £190 million loan due in April next year. The company's chairman, Sir Adrian Montague, acknowledged the precarious situation during a rigorous examination by MPs concerning the firm's financial performance.
In a session with the Environment Committee in Parliament, Sir Adrian Montague, alongside acting co-chief executives, described the current state as a “seminal moment” for Thames Water. The company, burdened with a total debt of £18 billion, recently faced speculation of government takeover amidst concerns about its financial stability.
Sir Adrian Montague revealed the fragility of Thames Water in July, exacerbated by the abrupt resignation of the chief executive shortly before a change in chairmanship, causing distress in the financial markets. Despite stabilizing the business, the chairman emphasized the need for a fresh start, underscoring the authenticity of the claim due to a newly constituted management team.
Thames Water's financial indicators present a worrying trend, with a 54% decline in profits in the first half of this year, a 13% rise in complaints, and the debt soaring to £18 billion. While the company recently announced a £500 million cash injection, it was facilitated by an additional loan to its parent company, Kemble Water.
Auditors have issued warnings that Thames Water may not continue as a “going concern.” The company has communicated the necessity for an additional £2.5 billion investment in the coming years. However, this is contingent, in part, on regulatory approval from Ofwat, with the condition that household bills may increase by 40% above inflation by 2030.
Committee member Barry Gardiner expressed concern over Thames Water's influence on Ofwat, suggesting that if the regulator doesn't approve the proposed bill increase, it could trigger a quasi-nationalisation, incurring substantial costs for the taxpayer.
The unfolding financial challenges underscore the urgent need for Thames Water to navigate a complex financial landscape and negotiate a sustainable path forward.
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