By Sarah Young and Paul Sandle
LONDON (Reuters) – British utility Thames Water said on Tuesday it has seen “considerable interest” from investors in a process to raise new equity, crucial to its multi-layered rescue plan, as it awaits the regulator’s ruling on how much it can raise customer bills.
The water supplier, the country’s biggest, has 17 billion pounds ($21.65 billion) of debt and is fast running out of cash after its current owners refused to stump up new money earlier in the year, putting the government on standby for nationalisation.
Seeking to avoid that, Thames Water has lined up 3 billion pounds of funding from its creditors to see it through the next two years, and is also running a process to raise new equity of 3.25 billion pounds.
But before any equity investment can be finalised, it is waiting for water regulator Ofwat’s ruling on Dec. 19 on how much it can charge customers over 2025-2030, a crucial factor in shaping its future profitability.
“I can’t reiterate enough the next most important element is the final determination,” Chief Executive Chris Weston told reporters.
Asked about recent conversations with Ofwat, Weston said it was a matter of wait and see.
Amongst the interested equity bidders are British financial investor Covalis Capital and France’s Suez Group, and a number of others who have made indicative non-binding bids.
“There has been considerable interest with credible investors currently participating,” Weston said.
“I am very comfortable with the amount of interest that has been shown and the number of parties that have stepped forward.”
Weston said it would take some time for Thames Water to digest Ofwat’s ruling, which covers future levels of investment and from which investors try to calculate potential returns.
Reporting half-year results, Weston said Thames was making progress with its turnaround and it reported an improvement in earnings, but its environmental performance deteriorated.
For the six months to the end of September, it posted underlying earnings (EBITDA) of 715 million pounds, up 14%. It blamed record rainfall for a 40% rise in total spills.
($1 = 0.7851 pounds)
(Reporting by Sarah Young; Editing by Paul Sandle and Susan Fenton)
