Key facts
- Thames Water is reportedly considering a public stock market listing early next decade.
- The company faces potential nationalisation and is expected to run out of cash in October.
- A plan involving senior bondholders, including Elliott Management and Apollo Global, is being discussed.
- Pennon reported a profit of £135.1m for the year ending March, recovering from a £35.1m loss.
- Pennon's South West Water unit was fined nearly £2m for a 2024 contaminated water incident.
Thames Water is reportedly exploring a return to the London Stock Exchange, a move that could occur early next decade as the company grapples with significant debt and the threat of nationalisation. Under current financial arrangements, Thames Water is expected to face a cash shortfall in October. A proposed plan, detailed by the Financial Times, would see control of the company transferred to its senior bondholders, including hedge fund Elliott Management and private equity firm Apollo Global. This restructuring is anticipated to incur costs of nearly £750 million, encompassing payments to financial and legal advisors, as well as to the creditors themselves, with an additional estimated £286 million in accrued interest.
Concurrently, Pennon, the owner of South West Water, announced a return to profitability for the fiscal year ending March, reporting a profit of £135.1 million, a significant turnaround from the previous year's loss of £35.1 million. The company reiterated its apology for a 2024 incident involving contaminated water in Devon, for which its South West Water unit was fined almost £2 million. The incident, caused by cryptosporidium parasites, led to sickness in approximately 140 people and required 16,000 homes in Brixham to boil drinking water for 54 days. Judge Stuart Smith described the harm as "wide-ranging and profound" due to inadequate monitoring systems.
Pennon's new chief executive, Keith Haslett, has prioritized "operational excellence" and improving "operational discipline and capital delivery." Analysts noted that investor focus remains on operational performance, with Pennon's stock falling over three percent following the announcements. City experts expressed skepticism about the appeal of a potential Thames Water share issue, citing its difficult history and the substantial outlay required for a creditor-backed takeover. Ofwat issued a broad warning to water companies, emphasizing accountability for failing to meet obligations to customers and the environment.