Thames Water does not have enough money to pay back its debt ahead of a looming deadline, the boss of the struggling utility company has admitted.
The UK’s largest water supplier has £1.4bn of external debt maturing in the coming years, including £190m in April 2024.
Asked by MPs if Thames Water’s holding company had enough to meet the first repayment, Alastair Cochran, joint interim chief executive, said: “Not currently, no.”
Sir Adrian Montague, the chairman, said the company was in talks with lenders about pushing back the deadline until after regulator Ofwat has published its 2024 price review.
He added: “Our proposition to the lenders is going to be, ‘Please will you extend the maturity because everything about Thames Water will be much clearer from a financial perspective after we have received Ofwat’s determination.’”
The admission highlights the scale of the squeeze on Thames Water’s finances as it grapples with a huge debt pile.
The company last month revealed that its debts rose to £14.7bn in the six months to September, while profits fell by 54pc to £246.4m.
Appearing in front of MPs on the environment, food and rural affairs select committee, bosses played down comparisons to Carillion, the debt-laden outsourcing giant that collapsed in 2018.
Instead, Sir Adrian blamed efforts by Ofwat to limit price increases for customers for some of the company’s financial woes.
He said: “I think we would say that some of the problems that we’re now encountering were because our bills were kept deliberately very low over the last period.”
The Thames Water chairman also apologised for causing “confusion” after referring to a £500m shareholder loan as equity during a previous committee hearing.
Earlier this year the company received a £750m cash injection to help keep it afloat. The company previously referred to £500m of this as “new equity”, when in fact it was a loan to parent company Kemble Water Holdings with an 8pc interest rate.
Sir Adrian said he stood by the comments, but admitted: “We were not clear enough in unpacking the different elements of that.”
MPs criticised the company for paying out a £37.5m dividend even as it missed key targets for pollution and leaks.
Thames Water is under fire for the quality of its service amid a surge in the number of leaks and amount of raw sewage being pumped into UK rivers.
But Sir Adrian said the payouts were essentially to ensure shareholders were incentivised to keep injecting money into the company.
It comes after Thames Water scrapped its target of achieving net zero emissions by 2030 and abandoned its smart meter project as it focuses on its ailing finances.
During the hearing, Mr Cochran admitted that the company’s turnaround plan would take longer than the three years previously stated.
But he added: “We do believe we have a comprehensive plan in place to deliver material benefits to our customers.”
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