Thames Water, battling to avoid administration, agrees to fine payment plan

[LONDON] Britain’s Thames Water said on Wednesday (Aug 27) the regulator had given it some breathing space to repay £123 million (S$213.1 million) worth of fines, as it continues to try to secure new funding to avoid temporary government nationalisation.

Under the deal agreed with regulator Ofwat, almost £100 million of what Thames Water owes could be delayed until 2030.

The company, Britain’s biggest water company with 16 million customers, has been battling for survival since last year, with the government on standby to put it into its special administration regime (SAR) should it fail to agree a deal.

It is at the centre of a public backlash against the water sector, blamed for polluting Britain’s river and seas, and was fined earlier this year over waste water pollution and for dividend payments it made.

Regulator Ofwat said Thames Water would pay an initial 20 per cent of the fines in the coming weeks with the balance to follow on the earliest of three possible dates, either 30 days after its recapitalisation, or if it enters SAR, 30 days after it exits SAR, with a backstop date of March 31 2030.

“This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process,” Lynn Parker, senior director of Enforcement at Ofwat said.

Thames Water said in its statement it “continues to work closely with stakeholders to secure a market-led recapitalisation”, which involves its creditors investing new equity and taking a haircut on debt.

The company had repeatedly warned that to secure the investment it needs leniency over fines and pollution targets. It could be on the hook for £1.4 billion worth of fines over the next five years.

The government in July announced plans to overhaul water regulation, which could include giving companies breathing space on fines to help them avoid financial collapse, but it is not clear whether those changes will be made in time to help Thames Water. REUTERS