South East Water has warned it needs a cash injection from investors to remain in business, as it awaits a key ruling from regulator Ofwat on its future spending plans. The company, which supplies 2.3 million customers across Kent, Sussex, Surrey, Hampshire and Berkshire, said it is in “advanced” discussions with lenders and shareholders for additional liquidity, but has not yet secured a deal.
In a results statement on Wednesday, the firm cautioned that without the extra funding, it would not have sufficient liquidity for the going concern period, casting “significant doubt” on its ability to continue. The company is already on Ofwat’s watchlist for financially at-risk firms, alongside Thames Water and other regional monopolies.
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 search for funding follows a £150m loan provided by its owners to a unit within the utility group earlier this year.
The financial update comes ahead of Ofwat’s draft verdict on Thursday regarding water companies’ five-year spending plans and bill increases to 2030. South East Water has proposed a £1.9bn spending plan to maintain and update infrastructure, which would involve a 22% increase in customer bills.
For the year to 31 March, South East Water’s pre-tax loss narrowed to £36m from £74m the previous year, while turnover rose 9% to £281m. The company remains under Ofwat investigation for a June 2023 incident when it failed to supply water to thousands of customers for over a week, which could result in a hefty fine.
