We do NOT need to nationalize, insists Thames Water boss Cathryn Ross, as troubled group fails to follow through on plan to secure £1bn lifeline
The new Thames Water boss insisted that nationalization is not in the cards even though he failed to deliver on his plan to secure a £1bn lifeline.
Cathryn Ross said the troubled water supplier’s cash pile of £4.4bn was “absolutely enough” to cover its costs for “this year, next year and beyond”, even though it is in debt for £14 billion.
Talk of Thames Water’s entry into a so-called special administration has been ongoing since the unexpected departure of chief executive Sarah Bentley last month.
But his successor said the firm was nowhere near the “nuclear” option of a taxpayer bailout.
“We are absolutely nowhere near that trigger,” Ross told the BBC.
Pile of debt: Thames Water boss Cathryn Ross (pictured) said the troubled firm’s cash pile of £4.4bn was “absolutely enough” to cover its costs “this year, next year and in the future”
The comments came as Thames Water, which provides water and sewerage services to 15 million customers in London and south-east England, raised £750m from investors.
This was less than the £1 billion desired by the company. And bosses have warned a further £2.5bn of support will be required by 2030 as it struggles to shore up its finances.
But Chairman Ian Marchant hailed the £750m lifeline as the biggest capital support package ever seen in the UK water sector.
Shareholders only agreed to hand over the cash if certain conditions are met, including “the preparation of a business plan that supports a more focused change.”
Thames Water, which is owned by a consortium of pension groups and foreign funds, has been criticized over the past year for polluting rivers and failing to fix leaking pipes.
Last week, the company was fined £3.3m for pumping millions of liters of sewage into East Sussex waterways in 2017.
But there has also been growing concern about its finances, particularly a £14bn mountain of debt that has accumulated as the company paid investors huge dividends and handed bosses lucrative salaries.
Ross, who has come under scrutiny for his previous experience running regulator Ofwat, admitted the debt figure was a “large sum”.
Monopoly: Thames Water provides water and sewerage services to 15 million customers in London and the South East of England
But he said the company had reached its “lowest level of indebtedness” in a decade.
Results released alongside yesterday’s fundraiser revealed that Thames Water revenue rose 4 per cent to £2.3bn last year.
But losses reached £82.6m due to higher operating costs. Rising interest rates have led it to pay higher financing charges on its debt, which has coincided with an urgent need to invest in infrastructure.
Ross and co-CEO Alastair Cochran said it was an “extremely challenging year.” They said in a statement: ‘Our network came under pressure from record temperatures, a drought and a freeze/thaw event.
‘At the same time, economic factors also affected our financial results with high inflation driven by an increase in energy and chemical prices. In short, our performance was not how we wanted it to be. Despite this, we are in a strong financial position.”
The government has been monitoring the situation for the past month, with officials standing by in case the company collapsed.