Key facts
- South East Water has abandoned a bond issue due to a lack of investor confidence in the sector.
- The company is seeking additional liquidity from lenders and shareholders to continue as a going concern.
- South East Water warned that without new funding, it would not have sufficient liquidity for its operational period.
- Ofwat has launched an investigation into whether South East Water breached its license regarding customer care.
- Tens of thousands of people in the South East Water region lost their water supply due to recent weather events.
- South East Water's pre-tax loss narrowed to £36m for the year to March 31, down from £74m the previous year.
South East Water has abandoned a planned bond issue as it seeks urgent funding to remain a going concern, warning that without additional liquidity, it would not have sufficient funds for its operational period. The company is in advanced discussions with lenders and shareholders for this cash injection.
The move comes after a week of significant supply interruptions for tens of thousands of customers in Kent, Sussex, Surrey, Hampshire, and Berkshire, caused by a freeze/thaw event combined with Storm Goretti. These issues led to cracked pipes and treatment works struggling to process water, with power outages also affecting pumps. Neighbouring company Southern Water temporarily halted its bulk water supply to parts of the South East Water network.
Regulator Ofwat has launched a first-of-its-kind investigation into whether South East Water breached its license concerning customer care. This adds to existing scrutiny, with the company already on Ofwat's watchlist for financially at-risk companies.
South East Water's parent company, HDF Holdings, is owned by NatWest's pension fund, an Australian infrastructure investor, and a Canadian pension fund. The company reported a pre-tax loss of £36m for the year to March 31, a narrowing from £74m the previous year, with turnover rising 9% to £281m. It is proposing to increase customer bills by 22% and spend £1.9bn on infrastructure upgrades.