Top shareholder OMERS writes off investment in struggling Thames Water

financialpost.com:

Thames Water Utilities Ltd.’s biggest shareholder has written off its investment in the utility in a sign of the escalating financial crisis at the United Kingdom‘s largest water company.

A Singapore-registered subsidiary of the Ontario Municipal Employees Retirement System, which holds a 31 per cent stake in Thames Water, said in accounts filed on Friday that it would make “a full write-down of (its) investment and loan receivable with accrued interest.”

Thames Water has been struggling with rising interest rates on its 18 billion pounds of debt and needs a cash injection of 750 million pounds from its owners by the end of this year to keep running and deliver infrastructure improvements.

The U.K.’s biggest utility, which serves 16 million customers, has been embroiled in disputes with regulators over water bills, fines and dividends and has failed to reach an agreement with them over its business plan.

“With the major shareholder writing off their investment, it is only a matter of time before the government has to take over,” Tim Whittaker, research director at the EDHEC Infrastructure Institute, said.

OMERS, one of Canada’s biggest public-sector pension funds, holds its stake in Thames Water through multiple investment vehicles including its Singapore-registered entity.

OMERS Farmoor Singapore PTE Ltd. owns about a fifth of Thames Water in addition to further stakes held by other OMERS entities. The write-down would apply to the overall 31 per cent stake, OMERS said.

The Singapore entity filed its accounts a day after OMERS withdrew its representative, Michael McNicholas, from the utility’s board with immediate effect.

OMERS’ fund value at the end of 2023 stood at about 74.5 billion pounds. Thames Water declined to