Debt-saddled Thames Water says it has enough money until the end of May

By Michael Susin

Thames Water Utilities said it has enough money to fund its operations for less than one year, and reported an increase in net debt.

The U.K. water utility, which serves 15 million customers across London and the Thames Valley, said on Tuesday that its liquidity as of June 30 was 1.8 billion pounds ($2.31 billion), enough to fund operations only to the end of May 2025.

The warning follows shareholders refusing to raise additional funds in March 2024, it said.

"The board has concluded that although it is possible that equity will be received by 31 March 2025, this should no longer be assumed for financial covenant forecast calculation purposes," the group said, adding that it will prepare what it called a remedial plan for its lenders as it missed certain compliance requirements, affecting its ability to make payments or incur debt.

Thames Water also said it will engage with potential investors and creditors to seek new equity and extend its liquidity runway.

This comes as the group posted a net debt of GBP15.25 billion for the year ended March 31, up from 13.96 billion last year.

"The challenges we face are well documented, but our operational and financial performance for the last year show good progress, and these positive results provide the right foundations on which to build and improve," Chief Executive Chris Weston said.

On the positive side, the group reported a swing to underlying pretax profit-which strips out one-off items-of GBP204 million from a loss of GBP83 million last year, reflecting higher operating profit and a reduction in finance expenses.

Write to Michael Susin at michael.susin@wsj.com

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07-09-24 0434ET

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