Thames Water agrees payment plan for Ofwat penalty bill

(Sharecast News) - Thames Water has secured a payment plan with Ofwat for �122.7m in penalties, it was confirmed on Wednesday, as it raced to avoid collapse and potential temporary nationalisation.

The UK's largest water company, serving 16 million customers, would pay �24.5m - 20% of the total fines - by 30 September, with the remaining balance due on the earliest of three dates - 30 days after a financial restructuring, 30 days after exiting a special administration regime (SAR) if one is imposed, or by a backstop deadline of 31 March 2030.

Thames confirmed the fines "will not be funded by customer bills", without further explaining how they would be funded.

The penalties were imposed in May after Ofwat found "significant" failings in Thames's wastewater operations, leading to sewage pollution, and over dividend payments made despite poor environmental and service performance.

The �104.5m wastewater fine was the largest in the regulator's history, while the �18.2m dividend penalty was the first of its kind in the sector.

"This payment plan continues to hold Thames Water to account for their failures but also recognises the ongoing equity raise and recapitalisation process," said Ofwat's senior director of enforcement, Lynn Parker.

"Our focus remains on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers."

The deal came as Thames's creditors negotiated a rescue package that could inject �5bn of new capital while writing off around �12bn of debt.

The government has appointed insolvency specialists FTI Consulting to prepare for a potential SAR should those talks fail.

Thames said it "continues to work closely with stakeholders to secure a market-led recapitalisation which delivers for customers and the environment as soon as practicable".

Reporting by Josh White for Sharecast.com.