South East Water issues warning over its future without fresh financing

South East Water has warned it needs fresh funding to pay its debts after suffering a £55 million loss due to winter outages.

The organisation, which serves around 2.3 million customers in the south-east of England, confirmed it is in talks with lenders to provide a new credit facility.

While existing funds are sufficient until July 2027, the company stated that further financing will be required “shortly after” that date.

In its annual report, the company said: “Shortly after the going concern period, it will be necessary to provide new credit facilities to maintain the continuity of the business.

“A serious but moderate downside may indicate the need for further funding towards the end of the financial year.”

This means there are doubts about the company’s ability to continue operating as a result of its financial troubles.

But the company said discussions with lenders about new financing to support its major infrastructure investment program were in advanced stages and were expected to be concluded in the summer.

South East Water said the last financial year was “an operationally and financially difficult year”.

“The operational challenges of the drought in summer 2025 and two major events in December 2025 and January 2026 resulted in significant additional costs, with event costs totaling £54.7 million in compensation to customers and other costs such as bottled water and tanker costs.”

This speaks to supply disruptions in Tunbridge Wells and Kent and Sussex during the winter months.

The supplier said more than 77,000 customers experienced “periods of water supply, low pressure or interruptions” due to leaks and bursts in the network and storms causing power outages.

Schools have been closed and some customers have had to cancel work due to childcare issues, while others have struggled to cope with medical issues, according to regulator Ofwat.

Helen Campbell, Ofwat’s chief executive for delivery, said: “South East Water must now focus on what matters most – its customers.

“These faults have caused real disruption and hardship for residents and businesses over many years, and supply disruptions of this scale have been far too frequent.

“This package is the first step towards full accountability and improved overall performance, and we welcome the company’s commitment to bringing these cases to conclusion.”

South East Water’s shareholders are also funding a £30.5 million compensation package agreed with Ofwat to improve the network in affected local areas.