Thames Water in crisis as investors pull £500m bailout

(Sharecast News) - Struggling UK utility Thames Water faced a funding crisis on Thursday after shareholders pulled a £500m bailout and demanded customers foot the bill through price rises.

The largely foreign group of investors were due to hand over the cash at the end of March, but said they now regarded the company as "uninvestible" after regulator Ofwat rejected Thames Water's plans to hammer customers with bigger bills in order to fix its leak-ridden network of pipes.

Unless funding is secured the company could face the prospect of being placed under special administration by the government, although chief executive Chris Weston on Thursday insisted this was not an immediate concern as Thames had enough cash to run day-to-day until May 2025.

Investors had originally wanted the company to raise bills by 40% over the next five years. Customers this month were hit with eye-watering rises of around 13% for 2024 amid a cost-of-living crisis.

Thames is labouring under a massive £14bn debt pile built up over years while investors received huge dividends. It has faced sever criticism for failing to tackle leaks and allowing sewage to be pumped into rivers and streams.

It ultimately wants a £2.5bn shareholder bailout to the end of the decade to stay solvent, but also held out the begging bowl to Ofwat, demanding it be allowed to raise prices, pay higher dividends and be let off the hook for polluting rivers and streams by receiving lower fines.

Parent company Kemble Water has also received a £500m loan from shareholders.

Reporting by Frank Prenesti for Sharecast.com