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Thames Water Utilities Limited has provided an update on its ongoing engagement with potential investors and creditors as it seeks to secure new equity and extend its liquidity runway following the Price Review 2024 (PR24) draft determination.
Response to Ofwat's Draft Determination
On 28 August 2024, Thames Water submitted its response to Ofwat’s draft determination for the 2025 to 2030 period. The company is preparing to launch a formal equity solicitation process in the coming weeks. However, the equity process is not expected to conclude until after the Final Determination, which was initially scheduled for December 2024 but may be postponed to January 2025. Thames Water will also have the option to appeal the Final Determination to the Competition and Markets Authority (CMA).
Engagement with Financial Stakeholders
Since July 2024, Thames Water has been actively engaging with financial stakeholder groups and their advisors. The company is facilitating information requests to help these stakeholders gain a clearer understanding of Thames Water’s business plan and its future funding requirements.
Current Liquidity Position
As of 31 August 2024, Thames Water reported a liquidity position of £1.57 billion, comprised of £1.15 billion in cash and cash equivalents—£0.38 billion of which is earmarked for reserves under its financing arrangements—and £0.42 billion in undrawn committed Class A and Class B facilities. Additionally, there are £0.55 billion of undrawn reserve liquidity facilities available, providing support in the event of a standstill under the financing arrangements. This liquidity is expected to sustain the company through May 2025.
Contingency Planning
In light of potential challenges, Thames Water has begun discussions with its financial stakeholders regarding the release of cash reserves under its financing agreements. This action would necessitate majority creditor consent. Should consent not be obtained and if the company is unable to access the Class A and/or Class B facilities, the available cash and cash equivalents will be depleted by the end of December 2024. In that scenario, the undrawn reserve liquidity facilities of £0.55 billion and the £0.38 billion in cash reserves would become accessible.
