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Thames Water’s biggest shareholder has written off his investment in the utility, in a sign of the worsening financial crisis at Britain’s biggest water company.
The Singapore-registered subsidiary of the Ontario Municipal Employees’ Retirement System, which owns a 31 per cent stake in Thames Water, said in its financial statements filed Friday that it will “record a full write-down.” [its] Investments and loans with accrued interest.”
Thames Water is struggling with rising interest rates on its £18bn debt and needs a £750m cash injection from its owners by the end of this year to continue operating and deliver infrastructure improvements.
Britain’s biggest electricity company, which serves 16 million customers, is embroiled in a dispute with regulators over water bills, fines and dividends, and has been unable to reach an agreement with regulators over its business plans.
“The major shareholders have written off their investments, so it’s only a matter of time before the government takes over,” said Tim Whittaker, research director at EDHEC’s Infrastructure Research Institute.
Omars, one of Canada’s largest public pension funds, holds shares in Thames Water through multiple investment vehicles, including a Singapore-registered entity.
Omars Farmour Singapore PTE owns about a fifth of Thames Water, in addition to even larger shares held by other Omars companies. Mr Omars told the Financial Times that the writedown would apply to 31% of the total shares.
The Singapore entity filed its accounts a day after Omars forced its principal, Michael McNicholas, to resign from the power company’s board with immediate effect.
Omer’s fund value at the end of 2023 was approximately £74.5bn. Thames Water declined to comment.
“Thames Water is a company with a regulatory capital value of £19bn, available liquidity of £2.4bn, annual regulatory income of £2bn and a new leadership team,” regulator Ofwat said. he said in a statement Friday. “They must continue to pursue all options to seek greater fairness. Safeguards are in place to ensure service to customers is protected regardless of the issues faced by shareholders.” .”
Thames Water’s second largest shareholder, British pension fund Universities Superannuation Scheme, declined to comment.
Omer’s decision will raise further concerns about Thames Water’s finances. The government has already drawn up an emergency plan for the temporary renationalization of power companies called Project Timber.
Omers and eight other shareholders decided in March not to inject much-needed equity into the business, saying it was “uninvestable” following discussions with regulator Ofwat.
Thames Water had asked for a 56% increase in its bill, including inflation, as well as limits on regulatory fines and more generous dividend rules. Ofwat is due to produce a draft ruling on June 12, but Thames Water’s owners believe the regulator is unlikely to agree to their demands.
Last month, the water company’s parent group, Kemble, defaulted on its debts. Kemble’s bonds are currently trading at less than 10% of their face value, suggesting lenders are also preparing for a full writedown.
If they leave, Thames Water will have to find new investors and use up its cash reserves.
Prime Minister Jeremy Hunt said last month that utilities needed to sort out their own financial problems and the government would not insure investors against bad decisions. Mr. Omers’ move did not change the government’s position or accelerate contingency planning, according to people familiar with the situation.
Additional reporting by Anna Gross in London
