London (AFP) – A court on Tuesday approved a £3 billion ($3.8 billion) emergency loan for Britain’s largest water supplier, Thames Water, offering it a lifeline as it buckles under a mountain of debt. The loan provides a short-term solution to keeping the company, faced with £16 billion-worth of debt, afloat while it finds the necessary funding to stave off a costly public bailout.
To help turn its fortunes around, Thames is appealing to Britain’s water regulator to hike its bills further and is looking to attract takeover offers. The court’s decision “marks a significant milestone for Thames Water,” the company’s chairman Adrian Montague said in a press statement on Tuesday. “Its implementation is a key step in strengthening our long-term financial resilience,” he added.
Faced with a desperate need for funds to update its infrastructure, Thames launched an appeal to the British water regulator Ofwat on Friday to hike its prices significantly higher than it was permitted to at the end of last year. Thames customers are set to see average annual water bills rise to £588 by 2030 under Ofwat’s current decision, which fell short of the 59-percent hike Thames requested.
The outcome of the appeal will also be key to determining investor interest in the company. If the company that serves 16 million customers, or a quarter of the UK population, fails to find the necessary funding, it will have to call on the state to bail it out.
The struggling water company also faces an £18 million fine by Ofwat over its decision to pay “unjustified” dividends to shareholders while performance suffered. Adding to its difficulties, Thames is under investigation by Ofwat to determine whether it failed in its environmental obligations. The company and its UK peers have recently been hit with heavy fines over failures to plug raw sewage discharges in rivers.
© 2024 AFP
