Thames Water directors hold crunch talks over utility’s future
The board of Thames Water was locked in crunch talks on Wednesday as shareholders prepare to dilute a pledge to inject funds into the company that would secure its survival.
Sky News has learnt that the directors of Britain’s biggest water company met to discuss its financial future after months of talks involving debt and equity investors, lenders, regulators and government officials.
One industry source said that Thames Water‘s shareholders, who include the Universities Superannuation Scheme (USS) and China’s sovereign wealth fund, were poised to conclude that they were unable to contribute hundreds of millions of pounds of promised funding after Ofwat, the industry watchdog, indicated that it would not bow to the company’s demands for a package of regulatory concessions.
Talks were continuing into Wednesday evening, and it remained possible that the picture could change ahead of an announcement expected to be made by the company on Thursday morning.
Thames Water’s shareholders had indicated that they were prepared to commit £3.25bn to the company in the coming years, with the first £750m due to be injected this year.
The investors’ likely decision to water down that commitment is not irreversible and could still be changed if the financial profile of a future investment improved, said a source close to one of them.
The company employs about 7,000 people, and serves nearly a quarter of Britain’s population.
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December: Thames Water can’t pay £190m
It is, however, drowning in well over £15bn of debt, with huge interest payments required to service it.
Thames Water’s shareholders also include the Canadian pension fund Omers, Infinity Investments, a subsidiary of the Abu Dhabi Investment Authority, and the BT Pension Scheme.
The utility has been seeking concessions including a 40% rise in consumers’ water bills, an easing of capital spending requirements and leniency on forthcoming regulatory penalties.
If the shareholders ultimately confirm their decision to pull the plug on additional financial support that was announced last year, it would appear to leave the heavily indebted company with few viable options to secure its future.
Last summer, Sky News revealed that Whitehall officials had started drawing up contingency plans for Thames Water’s collapse amid fears that it might not survive.
However, in an investment plan unveiled in October, the company said its shareholders were “stepping up to support… much-needed investment, underscoring their commitment to delivering Thames’ turnaround and life’s essential service for the benefit of our customers, communities and the environment”.
“Shareholders have already invested £500m of new funds in 2023,” it said at the time.
“In addition, they have agreed to provide a further £750m in new equity funding… subject to satisfaction of certain conditions, including the preparation of a business plan that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements.
“Our shareholders have also acknowledged the need for additional equity investments indicatively in the region of £2.5bn in [the next regulatory period].
“In aggregate, this would equate to total equity investment of £3.7bn, the largest equity support package ever proposed in the UK water sector.”
The £750m referred to in that announcement is now unlikely to proceed without profound regulatory changes, the company is expected to say on Thursday.
If Thames Water did eventually collapse, a temporary nationalisation would involve placing the company’s operating business into a special administration regime (SAR) akin to that used when the energy supplier Bulb collapsed in 2021.
That would ignite concerns in government that the triggering of a SAR could ultimately cost taxpayers billions of pounds.
Ultimately, the Bulb administration cost the public purse a far smaller sum, but water industry ownership restrictions which prevent consolidation mean this figure could be dwarfed if Thames Water was to fail.
Thames Water serves 15 million customers across London and the south-east of England, and has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.
It is facing multiple fines and regulatory investigations, including into the payment of dividends to Kemble Water, its parent company.
The company has been beset by management turmoil, with Sarah Bentley, its chief executive for the last three years, resigning last summer.
She was replaced by Chris Weston, the former Aggreko chief.
The financial peril in which Thames Water finds itself has sparked calls from critics of the privatised industry to renationalise all of the UK’s major water companies.
A number of the companies have been forced to seek extra funding from their shareholders, with the state of the water industry likely to feature prominently during the general election campaign.
Nearly £1.4bn of the company’s bonds mature by the end of this year, with Ofwat price controls meaning water companies have little scope to generate additional income.
Read more:
Thames Water lenders hire EY as debt deadline looms
Thames Water bosses admit it can’t meet April debt repayment
Water firms face backlash over record sewage spills in England
In total, tens of billions of pounds have been handed to shareholders in water utilities across Britain since privatisation, stoking public and political anger given the industry’s frequent mismanagement.
Earlier this month, Sky News revealed that a group of lenders to Thames Water’s parent company had engaged advisers weeks before a £190m debt held by Britain’s biggest water utility falls due.
Thames Water and a spokesman for its shareholders declined to comment on Wednesday evening.
UK
Teenager living in ‘continuous pain’ after surgeon Dr Yaser Jabbar carried out ‘inappropriate’ operations
A 15-year-old boy who was operated on twice by a now unlicensed Great Ormond Street surgeon is living with “continuous” pain.
Finias Sandu has been told by an independent review the procedures he underwent on both his legs were “unacceptable” and “inappropriate” for his age.
The teenager from Essex was born with a condition that causes curved bones in his legs.
Aged seven, a reconstructive procedure was carried out on Finias’s left leg, lengthening the limb by 3.5cm.
A few years later, the same operation was carried out on his right leg which involved wearing an invasive and heavy metal frame for months.
He has now been told by independent experts these procedures should not have taken place and concerns have been raised over a lack of imaging being taken prior to the operations.
Yaser Jabbar rescinded his UK medical licence last year. Pic: LinkedIn
His doctor at London’s prestigious Great Ormond Street Hospital was former consultant orthopaedic surgeon Yaser Jabbar. Sky News has spoken to others he treated.
Mr Jabbar also did not arrange for updated scans or for relevant X-rays to be conducted ahead of the procedures.
The surgeries have been found to have caused Finias “harm” and left him in constant pain.
“The pain is there every day, every day I’m continuously in pain,” he told Sky News.
“It’s not something really sharp, although it does get to a certain point where it hurts quite a lot, but it’s always there. It just doesn’t leave, it’s a companion to me, just always there.”
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Finias’s surgery pictures
Care of over 700 patients being assessed
Mr Jabbar rescinded his UK medical licence in January last year after working at Great Ormond Street between 2017 and 2022.
The care of his 700-plus patients is being assessed, with some facing corrective surgery, among them Finias.
“Trusting somebody is hard to do, knowing what they have done to me physically and emotionally, you know, it’s just too much to comprehend for me,” he said.
“It wasn’t something just physically, like my leg pain and everything else. It was emotionally, because I put my trust in that specific doctor. My parents and I don’t really understand the more scientific terms, we just went by what he said.”
Doctors refused to treat Finias because of his surgeries
Finias and his family relocated to their native Romania soon after the reconstructive frame was removed from his right leg in the summer of 2021.
The pain worsened and they sought advice from doctors in Romania, who refused to treat Finias because of the impact of his surgeries.
Dozens of families seeking legal claims
His mother Cornelia Sandu is “furious” and feels her trust in the hospital has been shattered. They are now among dozens of families seeking legal claims.
Cyrus Plaza from Hudgell Solicitors is representing the family. He said: “In cases where it has been identified that harm was caused, we want to see Great Ormond Street Hospital agreeing to pay interim payments of compensation for the children, so that if they need therapy or treatment now, they can access it.”
Finias is accessing therapy and mental health support as he prepares for corrective surgery later in the year.
A spokesperson for Great Ormond Street Hospital told Sky News: “We are deeply sorry to Finias and his family, and all the patients and families who have been impacted.
“We want every patient and family who comes to our hospital to feel safe and cared for. We will always discuss concerns families may have and, where they submit claims, we will work to ensure the legal process can be resolved as quickly as possible.”
Finias with his mother and sister
Service not ‘safe for patients’
Sky News has attempted to contact Mr Jabbar.
An external review into the wider orthopaedic department at the hospital began in September 2022.
It was commissioned after the Royal College of Surgeons warned the hospital’s lower limb reconstruction service was not “safe for patients or adequate to meet demand”.
The investigation is expected to be completed by the end of the year.
Sir Keir Starmer has said closer ties with the EU will be good for the UK’s jobs, bills and borders ahead of a summit where he could announce a deal with the bloc.
The government is set to host EU leaders in London on Monday as part of its efforts to “reset” relations post-Brexit.
A deal granting the UK access to a major EU defence fund could be on the table, according to reports – but disagreements over a youth mobility scheme and fishing rights could prove to be a stumbling block.
The prime minister has appeared to signal a youth mobility deal could be possible, telling The Times that while freedom of movement is a “red line”, youth mobility does not come under this.
His comment comes after Kaja Kallas, the EU’s high representative for foreign affairs, said on Friday work on a defence deal was progressing but “we’re not there yet”.
Sir Keir met European Commission president Ursula von der Leyen later that day while at a summit in Albania.
Ursula von der Leyen and Sir Keir had a brief meeting earlier this week. Pic: PA
If agreed, the deal will be the third in two weeks, following trade agreements with India and the US.
Sir Keir said: “First India, then the United States – in the last two weeks alone that’s jobs saved, faster growth and wages rising.
“More money in the pockets of British working people, achieved through striking deals not striking poses.
“Tomorrow, we take another step forward, with yet more benefits for the United Kingdom as the result of a strengthened partnership with the European Union.”
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Conservative leader Kemi Badenoch has said she is “worried” about what the PM might have negotiated.
Ms Badenoch – who has promised to rip up the deal with the EU if it breaches her red lines on Brexit – said: “Labour should have used this review of our EU trade deal to secure new wins for Britain, such as an EU-wide agreement on Brits using e-gates on the continent.
“Instead, it sounds like we’re giving away our fishing quotas, becoming a rule-taker from Brussels once again and getting free movement by the back door. This isn’t a reset, it’s a surrender.”
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