The boss of Thames Water, a struggling utility company, has admitted that the company does not have the money to repay its debts before a deadline looms.
The UK’s biggest water supplier has £1.4bn in external debt due in the next few years, including £190m by April 2024.
When asked by MPs whether Thames Water’s holding firm had enough money to pay the first repayment Alastair Crochran, joint interim CEO, replied: “Not at this time, no.”
Sir Adrian Montague said that the company is in discussions with lenders to push back the deadline after the regulator Ofwat publishes its 2024 price review.
He said: “Our proposal to the lenders will be to ask them to extend the maturity, because after receiving Ofwat’s decision everything will be clearer in terms of financial perspective.”
This admission shows how much pressure is being put on Thames Water as it struggles to pay off a massive debt.
Last month, the company revealed that it’s debts increased to £14.7bn during the six-month period ending September while profits dropped by 54pc to £246.4m.
The bosses who appeared before the MPs of the Environment, Food and Rural Affairs Select Committee played down comparisons with Carillion, a debt-ridden outsourcing giant which collapsed in 2018.
Sir Adrian instead blamed Ofwat’s efforts to limit the price increases for consumers for some of his company’s financial troubles.
He said: “I believe we’d say that some problems we’re now experiencing were caused because our bills were deliberately kept very low during the last period.”
Thames Water’s chairman apologized for “causing confusion” when he referred to a £500m loan from a shareholder as equity at a previous hearing.
The company received a £750m injection of cash earlier this year to keep it afloat. The company referred to £500m as “new equity” when it was actually a loan with an interest rate of 8pc to the parent company Kemble Water Holdings.
Sir Adrian stood by his comments but acknowledged: “We weren’t clear enough when we unpacked the different elements.”
MPs criticized the company for paying a dividend of £37.5 million despite it missing key targets in terms of pollution and leaks.
Thames Water has been criticized for its quality service, following a rise in leaks and the amount of raw sewage that is being pumped into UK river systems.
Sir Adrian explained that the payments were designed to encourage shareholders to continue investing money in the company.
This comes after Thames Water abandoned its goal of achieving zero emissions by 2030, and its smart metering project to focus on its failing finances.
During the hearing Mr Cochran acknowledged that the turnaround plan of the company would take more than the three-year period previously stated.
He added, “We believe that we have a comprehensive strategy in place to deliver tangible benefits to our clients.”