(Reuters) – Britain’s Southern Water said on Friday it has suspended dividend at least until 2025 following its credit rating downgrade as water companies in the country struggle to raise fresh funds to tackle mounting debt.
Fitch, which had earlier in the day downgraded Southern Water’s senior secured class A rating to ‘BBB’ from ‘BBB+’, said the downgrade led to a “trigger event” that prevents the company from distributing dividends after two of the three credit rating agencies rated the senior secured rating to below ‘BBB+’.
“Our ultimate shareholders have not received a dividend for the sixth successive year, and do not anticipate receiving a dividend for the remainder of this regulatory period to March 2025,” Southern Water’s Chief Financial Officer Stuart Ledger said in a statement.
Southern Water, which is backed by Macquarie Group’s asset management unit, said it is engaged with its shareholders to raise 550 million pounds ($706.09 million).
Water firms in Britain are struggling to raise fresh funding to curb mounting debt and concerns have increased further as they have failed to invest in infrastructure to the extent raw sewage regularly has to be released into rivers and the sea.
On Wednesday, the country’s regulator Ofwat said investors are reluctant to inject more cash into Britain’s largest water supplier Thames Water even though the company is still “a long way” from needing emergency intervention.
($1 = 0.7789 pounds)
(Reporting by Anirudh Saligrama in Bengaluru; Editing by Daniel Wallis)