READING: Potential investors in Thames Water will have to submit new bids for the water utility by Feb 10, according to people familiar with the matter, as the beleaguered firm seeks an urgent injection of equity to boost its finances.
The highly indebted company told bidders to take industry regulator Ofwat’s December ruling about the scope for bill increases and investor returns into account for their submissions, said the people, who asked not to be identified because the matter is private.
Thames Water declined to comment when contacted about the bidding process.
Thames Water has been looking to raise at least US$4.1bil in new equity after its existing shareholders declared the business “uninvestible” and kicked off a formal bidding process.
The company is set to run out of cash by end-March and would likely be forced to apply for special administration – a form of temporary nationalisation – without new funding.
The utility had previously received two indicative offers following an initial deadline in December, one from Castle Water Ltd and another from infrastructure investor Covalis Capital.
The deadline, however, came before Ofwat determined that shareholders will get a return of 5.1% over the next five-year period, at the lower end of the range of what was requested.
A tariff increase of 35% over the same period also fell short of the 52% asked for by the company.
In December, the firm asked a London judge to sanction this funding, backed by Class A creditors.
The plan will be put to a vote later this month, with the court set to make a decision early in February. — Bloomberg
