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Debt-laden Thames Water has said it is working with shareholders to secure extra cash, as ministers draw up contingency plans in the event of its collapse.

The company, which serves 15 million households, said on Wednesday that it needs “further equity funding” on top of the £500m it raised just three months ago.

But it insisted it maintains a “strong liquidity position” after ministers met with Ofwat, the industry regulator, to discuss the possibility of placing the firm into temporary public ownership.

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The business said in a statement: “Thames Water received the expected £500m of new funding from its shareholders in March 2023 and is continuing to work constructively with its shareholders in relation to the further equity funding expected to be required to support Thames Water’s turnaround and investment plans.

“Ofwat is being kept fully informed on progress of the company’s turnaround and engagement with shareholders.”

Earlier, Sky News revealed the government is discussing placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership if it collapses.

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Such an insolvency process was used when the energy supplier Bulb collapsed in 2021, sparking concerns that it could cost taxpayers billions of pounds.

Rebecca Pow, the water minister, did not say how much a government bailout could cost when pressed on the matter by Labour in the Commons today.

She insisted the water sector as a whole is “financially resilient” and the government is confident that Ofwat is “working closely with any company that would be facing financial stress”.

However Kemi Badenoch, the business secretary, went further and admitted she is “very concerned” by the situation.

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Kemi Badenoch ‘very concerned’ about fears Thames Water could collapse

“Obviously this is a commercially sensitive situation and I know that my colleagues across government are looking at what we can do,” she added.

“We need to make sure that Thames Water as an entity survives.”

Thames Water is the UK’s biggest water supplier and provides water services for 15 million customers in London and the South East.

It has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.

The firm is reportedly racing to raise £1bn from investors to shore up its finances, with AlixPartners said to be advising the firm on turnaround plans.

A government spokesman said finding the cash “is a matter for the company and its shareholders”.

But they added: “We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”

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Labour ‘not looking to untangle ownership of water industry’

Taking Thames Water into temporary public ownership would inevitably fuel calls from critics of the privatised water industry to renationalise all of the country’s major water companies.

Ed Miliband, the shadow climate secretary, called the situation an “absolute scandal” and blamed it on 13 years of the Tories “mismanaging” the regulation of the water industry.

Asked if Labour would nationalise water if it wins the next election, he said the government is going to leave behind “an appalling mess which we are going to have to sort out” and Labour will have to “look at the situation we find ourselves in”.

Pressed on what Labour’s approach to the problems would be, a party spokesman later said: “Spending hundreds of billions of pounds and taking years to untangle the ownership of the water industry is not what we’re looking to do.

“But regardless of ownership status, the water industry requires a plan that delivers change and drives standards. It shouldn’t be left to the public to clean up the mess or pay the price of Tory failure.”

Thames Water is owned by a consortium of pension funds and sovereign wealth funds, many of which are understood to be sceptical about delivering additional funding.

On Tuesday its chief executive, Sarah Bentley resigned with immediate effect after criticism of her £1.6m pay packet and the company’s environmental performance.

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Ministers weigh contingency plan for collapse of Thames Water
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Thames Water has been fined numerous times, and is facing a deluge of regulatory probes.

In 2021, it was hit with a £4m penalty for allowing untreated sewage to escape into a river and park, while in August 2021, it was ordered to pay £11m for overcharging thousands of customers.

Ofwat warned last December over the financial resilience of Thames Water, as well as Yorkshire Water, SES Water and Portsmouth Water.

Work and Pensions Secretary Mel Stride said he is confident that “whatever the situation is at Thames Water, the water will continue to flow”.

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Apollo charges in for stake in £7bn petrol retailer Motor Fuel Group

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Apollo charges in for stake in £7bn petrol retailer Motor Fuel Group

The investment giant Apollo Global Management is close to snapping up a stake in Motor Fuel Group (MFG), one of Britain’s biggest petrol forecourt empires, in a deal valuing it about £7bn.

Sky News has learnt that Apollo could announce as soon as Thursday that it has agreed to buy a large minority stake in MFG from Clayton Dubilier & Rice (CD&R), its current majority-owner.

The transaction will come after several months of talks involving CD&R and a range of prospective investors in a company which is rapidly expanding its presence in the electric vehicle charging infrastructure arena.

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Banking sources said there had been a “large appetite” to invest in the next phase of MFG’s growth, with CD&R having built the company from a mid-sized industry player over the course of more than a decade.

Lazard and Royal Bank of Canada are understood to be advising on the deal.

A stake of roughly 25-30% in MFG has been expected to change hands during the process, with Apollo’s investment said to be broadly in that range.

MFG is the largest independent forecourt operator in the UK, having grown from 360 sites at the point of CD&R’s acquisition of the company.

It trades under a number of brands, including Esso and Shell.

CD&R, which also owns the supermarket chain Morrisons, united MFG’s petrol forecourt businesses with that of the grocer in a £2.5bn transaction, which completed nearly 18 months ago.

MFG now comprises roughly 1,200 sites across Britain, with earnings before interest, tax, depreciation and amortisation (EBITDA) of about £700m anticipated in this financial year.

It is now focused on its role in the energy transition, with hundreds of electric vehicle charging points installed across its network, and growing its high-margin foodservice offering.

MFG has outlined plans to invest £400m in EV charging, and is now the second-largest ultra-rapid player in the UK – which delivers 100 miles of range in ten minutes – with close to 1,000 chargers.

It aims to grow that figure to 3,000 by 2030.

CD&R, which declined to comment on Wednesday afternoon, will retain a controlling stake in MFG after any stake sale, while Morrisons also holds a 20% interest in the company.

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Bankers expect that the minority deal with Apollo will be followed a couple of years later with an initial public offering on the London stock market.

CD&R invested in MFG in 2015, making its investment a long-term one by the standards of most private equity holding periods.

The sale of a large minority stake at a £7bn enterprise valuation will crystallise a positive return for the US-based buyout firm.

CD&R and its investors have already been paid hundreds of millions of pounds in dividends from MFG, having seen its earnings grow 14-fold since the original purchase.

Morrisons’ rival, Asda, has undertaken a similar transaction with its petrol forecourts, with EG Group acquiring the Leeds-based grocer’s forecourt network.

EG Group, which along with Asda is controlled by private equity firm TDR Capital, is now being prepared for a listing in the US.

Apollo declined to comment.

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Sainsbury’s blames Visa card issues for online payment failure

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Sainsbury's blames Visa card issues for online payment failure

J Sainsbury, the supermarket chain, was on Wednesday racing to resolve an issue with card payments made involving Visa and Barclays which was impacting customers’ ability to pay for online grocery orders.

Sky News understands that Sainsbury’s is working with Visa and Barclays to address the issue after a number of shoppers reported that their card payments had failed.

A Sainsbury’s spokeswoman initially said Visa card payments were to blame for the problems, with the retailer subsequently updating its position to say the technical issue actually rested with Barclays.

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The grocer ruled out the possibility of a cyberattack and said its website and app were functioning normally, with no direct impact on customers.

The issue nevertheless illustrates the extent to which the industry is on high alert for cybersecurity-related incidents after a spate of attacks which have raised concerns about the sector’s resilience.

In recent months, major British retailers including Marks & Spencer, the Co-op and Harrods have been the victim of cyberattacks, with the impact on M&S particularly acute.

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M&S has said the attack on its systems would cost it at least £300m and forced it to suspend online orders for months.

The Co-op saw in-store availability of thousands of products disrupted for several weeks.

A Sainsbury’s spokesperson said, “We’re working with one of our payment providers to resolve a temporary issue processing some payments for our Groceries Online service.

“We continue to deliver orders for customers and our website and app are working as normal.”

Visa said: “”Visa systems are operating normally. We are working with our partners to help them investigate.”

Barclays has been contacted for comment.

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Gary Neville hits out at national insurance rise – and makes prediction for Manchester United’s season

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Gary Neville hits out at national insurance rise - and makes prediction for Manchester United's season

Gary Neville has criticised the government’s national insurance (NI) rise this year, saying it could deter companies from employing people and “probably could have been held back”.

The former Manchester United and England footballer-turned business owner, who vocally supported Labour at the last election, employs hundreds of people.

But he expressed his frustration at the recent hike on employers’ NI, which has significantly increased the taxes businesses have to pay for their employees.

Speaking to Sky News’ Business Live, Neville said: “I honestly don’t believe that, to be fair, companies and small businesses should be deterred from employing people. So, I think the national insurance rise was one that I feel probably could have been held back, particularly in terms of the way in which the economy was.”

While the Sky Sports pundit thought the minimum wage increase introduced at the same time was necessary to ensure that people are paid a fair wage and looked after, he made it clear the double whammy for businesses at the start of April would be a challenge for many companies big and small.

“I mean look it’s been a tough economy now for a good few years and I did think that once there was a change of government, and once there was some stability, that we would get something settling,” he said. “But it’s not settling locally in our country, but it is not settling actually, to be fair, in many places in the world either.

“I don’t think we can ever criticise the government for increasing the minimum wage. I honestly believe that people, to be fair, should be paid more so I don’t think that’s something that you can be critical of. I do think that the national insurance rise, though, was a challenge.”

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Neville’s business interests are diverse, spanning property development, hospitality, media, and sports.

He co-founded GG Hospitality, which owns Hotel Football and the Stock Exchange Hotel, and is involved in Relentless Developments, focusing on building projects in the North West. He is also a co-founder of Buzz 16, a production company, and a partner in The Consello Group, a financial services company.

The tax increase is expected to raise £25bn for the Treasury, with employers having to pay NI at 15% on salaries above £5,000, and up to 13.8% on salaries above £9,100.

The rise has already led the Bank of England to warn that it is contributing to a job market slowdown.

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NI and tariffs pile pressure on firms

Governor Andrew Bailey warned last month that “the labour market has been very tight in the past few years, but we are now seeing signs that conditions are easing, employment growth is subdued, and several indicators of labour demand and hiring intentions have softened”.

The government has defended the tax increase, announced by Rachel Reeves in last year’s budget and implemented in April, arguing that the money was needed to pay for public services like the NHS to help bring down waiting lists.

‘Can’t get any worse’ for Man Utd

Neville conceded that turning beleaguered football club Manchester United around could prove more difficult than trying to bring about substantial economic growth.

The side finished 15th last season – its worst performance in the history of the Premier League.

“Yeah, that could be a bigger challenge than the economy… I think the two signings are good signings yet, there’s a couple more needed,” Neville said of his former club’s fortunes.

“I think they need a goalkeeper. And I think if they fill those two positions with decent signings, then United can have a lot, I mean, they have to have a better season than last year. It can’t get any worse, really.”

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