Together, Warrington Council-backed energy supplier battles for new funding | Economic news

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A locally-backed energy supplier to more than 170,000 homes struggles to secure new finance as it charts a path back to profitability amid the industry’s worsening crisis.

Sky News has learned that Together Energy, 50% owned by Warrington Borough Council, is working with advisers from Alvarez & Marsal to raise additional capital.

The company, which has 350,000 accounts, would argue to potential investors that it is well positioned to acquire underperforming competitors once wholesale energy markets begin to stabilize.

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Together is 50% owned by Warrington Borough Council

More than 20 domestic energy providers have collapsed since early August as uncovered market players were caught off guard by soaring wholesale gas prices.

The largest of them, Bulb, is expected to sink into some form of insolvency later Wednesday, with the taxpayer taking responsibility for funding its ongoing operations.

Market sources said Ofgem, the industry regulator, had filed a request to place Bulb on a special administration regime (SAR) – the first test of the bailout mechanism – on Wednesday morning.

It was not clear how large the funding gap for Together Energy, which employs around 250 people, is.

Other shareholders of the company include Paul Richards, its chief executive.

A spokesperson for the company insisted that it “was looking to find long-term strategic funding for growth, not short-term.” [capital]”, although industry sources said A&M had highlighted the need for short-term financing in recent months.

Together Energy claims that 100% of its electricity comes from renewable sources and that it “is working to offset 100% of our carbon dioxide by August 2023”.

Warrington Borough Council initially invested £ 18million in Together Energy in September 2019, arguing that the partnership was “an important part of the council’s work to address the climate emergency, tackle fuel poverty and create new employment opportunities for the local population “.

Earlier this year, the local authority boasted that the supplier’s organic growth model predicted the company would have 850,000 accounts receivable within three years.

However, the crisis in the industry has raised questions about the long-term sustainability of many small suppliers.

Two other providers backed by the council have already lost their independence: Bristol Energy, which was sold to Together Energy in September 2020 for £ 14million, and Robin Hood Energy, which received millions of pounds in city council funding. of Nottingham, collapsed last year, with its customers moved to British Gas.

Including Bulb customers, nearly four million UK homes have seen their energy supplier go into insolvency proceedings since the summer, and more companies are expected to follow suit.

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Energy supplier crisis must never happen again – owner of British Gas

Sky News revealed Bulb’s impending collapse this week, along with the imminent appointment investment bank Lazard to sell the company or its assets.

Lazard has been advising Bulb on fundraising options for several months and has held discussions with a range of potential bidders, including Octopus Energy, OVO Energy and Shell Energy Retail.

Some or all of these companies are expected to file new non-government Bulb bids.

An energy company executive said the prospect of taxpayers funding Bulb during the winter months, coupled with the possibility of more normalized wholesale gas prices by next spring, would make Bulb a buyout opportunity interesting.

Teneo Restructuring is appointed by Ofgem as special administrator of Bulb.

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