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Thames water could be forced to revise an account that was published last year, amplifying concerns over the financial stability of the UK’s largest water company.
According to documents seen by the Financial Times, Thames Water is trying to avoid rescue bids through rescue bids from creditors.
The amendment could result in further breach of Thameswater’s debt agreement. This is a strict condition that usefulness means that certain financial ratios must be adhered to. According to people familiar with the situation, the Accounting Watchdog, the Financial Reporting Council, is aware of the issue.
The UK’s biggest water operator is struggling under a £2 billion debt mountain and agreed to a £5 billion rescue plan with creditors after US private equity firm KKR left the bid earlier this month.
A senior credit group consisting of around 100 financial institutions, including US hedge fund Elliot Management and Silver Points, is unaware of accounting issues, according to two people familiar with the situation.
According to the documents, there were concerns at Thames Water Camp that amendments to the account could encourage one senior lender to argue that a violation of the terms of the debt had occurred.
In that example, Thames Water could claim that it acted in good faith and got signed off for that account from the PWC, and also read the document.
Accounts for the March-March 2024 year period showed that Thameswater had earned its first profit in four years at £139 million compared to a loss of £132 million the previous year. However, this is almost entirely in the 10% increase in household bills previously agreed in 2023, with revenues rising by £221 million to £2.4 billion.
The lawyers at Linklaters, a company of the “magic circle” that represents Thames Water, suggest that there are “no practical consequences” for Thames’ water to break the contract and breach the contract, but the document is useful as last year’s major contract has already been triggered.
Potential fixes come at a dangerous moment for Thames’ waters. The UK government said Thursday that the Thames had prepared a “step-up” to plunge water into a special administrative regime or SAR, indicating it would reject a request from creditors to exempt it from key environmental laws. Conditions for their rescue bid.
Creditors had already agreed to halt the administration to lend to another emergency credit with Thames water, but the government and regulators had requested changes to government and regulatory subsidies licenses and emergency laws to protect their businesses from environmental protection laws.
Standoffs between creditors and the government threaten Thames to make Thames water the first water company as British and Wales utilities were privatized in 1989.
Thames Water’s previous year’s account was prepared under the Chief Financial Director of Alastair Cochrane, who resigned in March and was subsequently replaced. He did not immediately respond to requests for comment made via LinkedIn.
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Thames Water refused to specify what the error was to prompt a potential fix. In a statement, he said: “We follow international accounting standards that adopted all the UK and take regulatory accounting responsibilities seriously.
“The company is focusing on placing Thames water in a more stable financial foundation, implementing turnaround plans and providing market LED solutions that will benefit customers, UK taxpayers and the wider economy.”
Senior Creditor Group, Ofwat, the Government, FRC, Linklaters and PWC all declined to comment.
