(Reuters) -Britain’s Southern Water has secured up to 1.2 billion pounds ($1.65 billion) of equity from a consortium led by Australia’s Macquarie Asset Management and agreed to refinancing terms with creditors to avert a debt crisis, it said on Tuesday.
Since acquiring a majority stake in 2021, Macquarie has been working to overhaul the water utility’s performance following years of operational and regulatory shortcomings, having already invested 1.65 billion pounds in equity since then.
Mounting concerns over water pollution and years of underinvestment in infrastructure have plunged the UK’s water industry into a deepening financial and regulatory crisis.
Thames Water, the country’s biggest water supplier, has been on the brink of nationalisation amid a severe financial crisis and breaches of sewage treatment obligations.
Southern Water said it will get an initial 655 million pounds of equity commitments, with a further 545 million pounds by December.
It also added that the new refinancing terms are expected to cut the debt by more than half to 415 million pounds, from 865 million pounds.
The utility, which serves about 2.6 million customers across the UK, said in February it intends to raise 900 million pounds of new equity to support infrastructure improvements.
British Water companies have also been at loggerheads with regulators over the pricing regime that governs revenue from customer bills, with Southern Water and Thames Water among those appealing against Ofwat’s rules.
Ofwat said in December it would allow bills to rise by an average of 36% over the next five years, compared to the average of 44% requested by companies.
Southern Water, which demanded the highest increase at 83%, will increase bills by 53%, Ofwat said.
($1 = 0.7270 pounds)
(Reporting by Raechel Thankam Job and Yadarisa Shabong in Bengaluru, additional reporting by Ankita Bora; Editing by Mrigank Dhaniwala and Vijay Kishore)
