At least £300m will be repaid by the end of June 2023, a further £200m by the end of March 2025 and the remaining balance – around £440m – by the end of March 2027.

Ofwat took enforcement action in May after concerns over the terms of repayment of loans – made with regulator consent in 2008 and 2009 – to YW Group companies.

A restructuring seven years ago to simplify the holding company structure saw Kelda Eurobond become the borrower.

Ofwat has investigated loans made by Yorkshire Water to other companies in its group (Photo by Cate Gillon/Getty Images)

Ofwat said this effectively created new loans, adding: ‘As a result, Ofwat felt that Yorkshire Water had breached its licensing requirement to have Ofwat’s consent for new loans.

“In addition, Ofwat was concerned about the loan repayment terms and the ability of Yorkshire Water to recall loaned resources.

“Although both loans allowed Yorkshire Water to call the loan, no contractual repayment date was otherwise specified for them.”

Ofwat said YW would also invest an additional £100m to reduce spills from storm overflows.

According to figures obtained by the Labor Party, YW recorded 169,576 spill incidents between 2016 and 2021, which equates to one incident every 18 minutes.

Earlier this year, the Environment Agency said YW’s environmental performance needed “significant improvement” as it recorded 74 pollution incidents last year.

Martin Salter, of the Angling Trust, which campaigns for cleaner waterways, said: ‘These financial shenanigans at Yorkshire Water are just another example of the opaque casino economy that operates in our privatized water sector failing.

“Must-needed capital investment to fix leaks and tackle sewage overflows is going unfunded while millions of pounds are being transferred as loans with no benefit to customers or the environment.

“Water companies are private sector monopolies and need much stricter regulation from Ofwat and the Environment Agency.”

An Ofwat report last year found Yorkshire Water had “low levels of financial resilience”.

Ofwat Chief Executive David Black said: “Businesses need to be financially resilient if they are to meet the challenges that affect customers and the environment.

“We are delighted that Yorkshire Water has acknowledged our concerns and is taking these active steps to improve its financial position for the benefit of its customers.”

YW is part of a group led by Kelda Holdings whose shareholders include Singaporean sovereign wealth fund GIC, private equity fund Corsair Capital and investors Deutsche Asset Management.

Yorkshire Water said the repayments “will likely include capital injections from shareholders”.

He added: “The current external economic uncertainties remind us how important it is for us to be financially resilient, and the repayment of these intercompany loans is a prudent step to continue our resilience in the future.”

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