South East Water has warned it requires fresh financing to remain solvent after incurring a £55 million loss due to winter outages.
The utility, which supplies around 2.3 million customers in the south east of England, confirmed it is in discussions with lenders to secure a new loan facility.
While current funds are sufficient until July 2027, the company indicated that further financing would be essential “shortly after” this date.
The company said in its annual report: “Shortly after the going concern period it will be necessary to secure new loan facilities in order to continue as a going concern.
“The severe but plausible downside case… would indicate a need for further financing towards the end of the financial year.”
This means that there are doubts over the company’s ability to continue operating as a result of its financial woes.
But the company said talks with lenders over new financing to support its major infrastructure investment programme are in the late stages and are expected to conclude over the summer.
South East Water said the last financial year had been a “tough year operationally and financially”.
“The operational challenges of the 2025 summer drought and the two major incidents in December 2025 and January 2026 resulted in significant additional costs, with the incident costs amounting to £54.7 million in compensation to customers and other costs such as bottled water and tankering costs.”
It is referring to supply interruptions in Tunbridge Wells and across Kent and Sussex during the winter.
The supplier said more than 77,000 customers experienced “periods without water supply, low pressure or intermittent supplies” as a result of leaks and bursts across the network and storms causing power cuts.
Schools were closed and some customers had to cancel work due to childcare issues while others had difficulty dealing with medical conditions, according to regulator Ofwat.
Helen Campbell, executive director of delivery at Ofwat, said: “South East Water must now focus on what matters most – its customers.
“These failures have caused real disruption and hardship for residents and businesses across many years, and supply interruptions of this scale have happened far too often.
“This package is the first step towards full accountability and to improving overall performance, and we welcome the company’s engagement to bring these cases to a conclusion.”
South East Water’s shareholders are also funding a £30.5 million redress package agreed with Ofwat that will go towards improving the network in the affected local areas.