Macquarie digs deeper for redemption at Southern Water. There was no alternative | Nils Pratley
Many took the view in 2021 that Macquarie should have been run out of town, rather than be allowed to own another English water company,The giant Australian financial outfit’s former outing, remember, was at Thames Water from 2006 to 2017, which was when the absurd games of financial leverage began at the UK’s biggest water company,The then-chair of Ofwat later told MPs he asked himself the question “What do we do here, with that reputation?” when Macquarie made the best financial offer to rescue Southern Water,The deal was done eventually with Ofwat’s blessing,Macquarie-managed funds injected £1bn to take control and its infrastructure boss declared in an open letter that the firm would be “a responsible long-term steward of Southern Water and believes it can help the company deliver the transformation it requires”.
Part of that statement – the bit about being in it for the long term – is clearly true,Macquarie is now rescuing Southern for a third time, in effect,An extra £550m was injected in 2023,Now its consortium (of which it and its managed funds are about 90%) is putting in up to £1,2bn in equity to recapitalise Southern’s operating company.
The process is convoluted since only £655m is binding; a further £245m is intended to follow by the end of the year and the balance of £300m depends of the outcome of Southern’s appeal to try to secure bigger bill increases than the 53% allowed by Ofwat.But, in the shoes of the regulator or a fearful secretary of state, Steve Reed, you’d be breathing a sigh of relief.Their nightmare was the thought that the current refinancing crisis at Thames would spill over to Southern, the next most stressed operator.Instead, Southern should now have sufficient capital to get it through the current five-year regulatory period.Unlike at Thames, the fisticuffs with bondholders took place behind closed doors.
Lenders are taking a write-down from £865m to £415m across the complicated holding company group structure in what is a mini debt-for-equity swap to supplement the new capital,Macquarie’s approach to transparency didn’t extend to giving a leverage ratio for the regulated entity in recapitalised form – a critical metric – but the ratio is obviously lower than it was before the deal,Yet the Australian attempt at watery redemption is not quite the upbeat tale of emerging success presented in Tuesday’s announcement,The claimed “good progress” with Southern’s transformation plan requires a large helping of context,Yes, pollution incidents may be down by 40%, but the top executives are still on Reed’s banned list for bonuses on account of spills.
Meanwhile, the company got a two-star rating in the Environment Agency’s last assessment report – better than the one star Macquarie inherited, but still equal bottom-of-the-table,Ofwat’s separate performance scorecard noted that in 2023-24 Southern “reported the largest percentage net underperformance payment for a fourth consecutive year”,Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThose regulatory reports are almost a year old, so maybe the next annual crop will provide evidence of the “momentum” behind the turnaround,Until then, however, Macquarie has merely demonstrated it can cough up capital when there is no realistic alternative,On-the-ground operational delivery is what counts.
There is a long way to go,If the exercise is costing more than Macquarie expected in 2021, sympathy may be limited,
Rodrigues and Amanjot set up second thumping India win over England in T20 series
England fell to a second successive defeat against India at Bristol on Tuesday, falling 25 runs short in their chase of 182, and face a nervous wait to see if the captain, Nat Sciver-Brunt, will be fit for the third match of the series at the Oval on Friday.Sciver-Brunt was unexpectedly absent for three-quarters of the India innings on Tuesday with a “tight hip”, and looked far from fluent in an innings of 13 from 10 balls. She will be assessed over the next 48 hours to determine the extent of the injury.At Bristol it was a case of deja vu as England once again inserted India, conceded far too many runs for comfort, and failed to get within touching distance of their target after a tumble of early wickets.Tammy Beaumont’s first T20i half-century since September 2021 brought a glimmer of hope to the chase, but she was run out by the bowler Radha Yadav in the 12th over and England were left with too much to do at the death, despite a late flurry of boundaries from Sophie Ecclestone who was run out for 35 off the final ball of the innings
F1 chief wants to see record-breaking Silverstone stay on calendar for good
The Formula One chief executive, Stefano Domenicali, has said he would like the British Grand Prix at Silverstone to remain on the F1 calendar for ever, with the event set to host what is expected to be the largest meeting in the sport’s history, reaching half a million people over four days this weekend.The British GP, which has been on the calendar since F1 began in 1950, is expected to sell out with record numbers and Domenicali acknowledged it was part of a large and thriving F1 business in Britain, which he hopes can be improved by working closer with the UK government when he meets the prime minister, Keir Starmer, and other government officials at Downing Street on Wednesday afternoon.Last year Silverstone extended its contract with F1 to host the race until 2034, one of many long-term deals the sport has concluded recently, including Austria extending to 2041 last week, but Domenicali said the British GP was such a unique event for the sport in size and interest it could negotiate a deal of even greater longevity.“Silverstone has the right characteristics to stay for ever in the calendar,” he said. “There’s no other places where you can develop such a huge event in the UK
Jack Draper enters the Wimbledon meat grinder as Britain’s Big Thing | Barney Ronay
First-round stroll past Báez shed light on shapes, sounds and iconography of newfound Draper fandom at SW19As Jack Draper arched his back to serve, a set and a break up on Court No 1, a well-groomed man in thick silver sunglasses stood up in his seat and posed for a photo in front of the action, chewing theatrically on the handle of his lustrously finished handbag, thereby conveying to his social media feed that he was (a) present, vital, right here in the moment; and (b) not very interested in tennis.Nobody seemed to mind. In fairness Wimbledon’s big Tuesday best-of-British event did feel a bit like this. Less an act of white-hot sporting drama, more just, like, a really cool thing happening.An hour and 13 minutes into this first-round match Sebastián Báez would retire with a knee injury at 6-2, 6-2, 2-1 down
Wimbledon’s rampant British players deliver joint-best performance since 1976
It was always asking a lot for there to be a repeat of the heroics of the opening day at Wimbledon but thanks to Jack Draper, Dan Evans and Jack Pinnington Jones, the world No 281, Britain has 10 players through to the second round, the joint-best tally since 12 won through in 1976. What’s more, the total of seven British men into round two is the best at any grand slam event since Wimbledon 1997.Another searingly hot day began with a check through the history books to find out the highest number of British first-round winners in the Open era, which was 13, in 1968. That always looked out of reach but Pinnington Jones’s brilliant 7-6 (4), 6-3, 7-5 win over Tomás Martín Etcheverry, the world No 53 from Argentina, took the tally into double figures.Yet another product of Texas Christian University, where Cameron Norrie and Jacob Fearnley studied, Pinnington Jones played stunning tennis on his Wimbledon debut, winning five straight games from 5-2 down in the third set for victory
Talisman Stokes at Edgbaston evokes Flintoff’s 2005 impact – but he is due a score
A day out from the second Test against India at Edgbaston and Andrew Flintoff was dog-sticking to England’s batters in the nets, his very presence bringing memories of 20 years ago flooding back. It was here where Flintoff wrote his name into Ashes folklore, igniting the afterburners for England’s statement first innings, rescuing the second with a six-laden counterattack, and then sending down a famous over on the third evening that vaporised Justin Langer and Ricky Ponting.As well as driving England to that famous two-run victory, 141 runs and seven wickets across the four days made it Flintoff’s statistical peak as a fast-bowling all-rounder – the only time he went north of 100 runs and five wickets in the same Test. People often underestimate the physical and mental demands that the dual role places on those hardy enough to even attempt it; expecting both facets of their game to deliver consistently is unrealistic save for a handful of freakish greats.All of which is a segue into where Ben Stokes finds himself before this second instalment against India, albeit 1-0 up and buoyed by last week’s Headingley heist
Jack Draper coolly handles Wimbledon pressure by marching past Sebastián Báez
For three long weeks, as Wimbledon has gradually drawn closer, Jack Draper has had to navigate the growing anticipation within himself and from the world around him; he has had to field countless questions about his ability to handle the pressure and, in the quiet moments, he has surely wondered how he would deal with it all.Now, finally, he can simply focus on playing tennis. Draper took his first step forward at his home grand slam as one of the best players in the world by defeating the Argentinian Sebastián Báez with a dominant performance, establishing a 6-2, 6-2, 2-1 lead by the time his opponent retired because of a leg injury.“I obviously was aware of the buildup and all that sort of stuff,” said Draper. “I think my preparation has been really good
Andy Lee: ‘It’s illegal to taxidermy a human in Australia. I know because I looked into it’
My cultural awakening: Buffy gave me the courage to escape my conservative Pakistani upbringing
Your front-row pass to who the performers will be watching at Glastonbury
‘Joyous, immersive’ Beamish wins Art Fund museum of the year award
Seth Meyers on Trump’s new Nato nickname: ‘Why is anyone calling him daddy?’
Stephen Colbert on Ice: ‘Constantly devising new terrible ways to treat immigrants’