Investors at Thames Water have pulled the plug on £500m of emergency funding, raising concerns about the financial future of the country’s largest water company and increasing the prospect of nationalisation.

The beleaguered utilities company announced this morning that its shareholders had refused to provide the first tranche of £750m funding set to secure its short-term cashflow, after the company had failed to meet certain conditions.

The funding failure heightens the possibility that Thames Water could be placed into special administration, which would result in the government stepping in and temporarily renationalising the company.

Chris Weston, the chief executive of Thames Water, said on Thursday that this was a “long way off” but did not rule out the possibility.

“If at the end of the day – probably well into the end of next year – we were in a situation where we had no equity, then there would be the prospect … of special administration, but we are a long way from that point at the moment,” he told BBC Radio 4’s Today programme.

“There is a possibility but the key message today is one of reassurance.”

He said that the business had enough cash to last until May 2025 and it would be working to secure a final determination with Ofwat by the end of the year, while trying to secure extra equity from new and existing shareholders. He added that the company would continue to serve its 15 million customers as usual.

The crisis for Thames Water comes after devastating data on the scale of raw sewage discharges into rivers and seas this week.

Thames Water, who admit in their business plan they have been “sweating assets”, oversaw a 163% in the duration of sewage dumping into rivers as their creaking infrastructure failed to cope with rainfall levels.

Thames is also at the centre of a major investigation by the water regulator for England and Wales, Ofwat, into sewage dumping from its treatment works, which could lead to massive financial penalties being imposed on the company.

In July, Thames Water had agreed £750m of funding, with the first payment expected to be made on 31 March.

This was with the condition that the company provided a turnaround plan that produced improvements for customers, the environment and other stakeholders over the next three years.

Investors also required the turnaround plan to be supported by appropriate regulatory arrangements. That plan was published in October, with Thames Water wanting to increase bills for customers by as much as 40%.

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However, Thames Water said on Thursday that investors believed the conditions of funding had not been met and the £500m of new equity would not be handed over in the coming days.

A statement on behalf of Thames’s shareholders appeared to blame Ofwat: “After more than a year of negotiations with the regulator, Ofwat has not been prepared to provide the necessary regulatory support for a business plan which ultimately addresses the issues that Thames Water faces. As a result, shareholders are not in a position to provide further funding to Thames Water.

“Shareholders will work constructively with Thames Water, Ofwat and government on how to address the consequences of Ofwat’s decision.”

Weston said: “I’d like to reassure our customers that, despite this announcement, it is business as usual for Thames Water. Our 8,000 staff remain committed to working with our partners in the supply chain to provide our services for the benefit of our customers, communities and the environment.”

An Ofwat spokesperson said: “Safeguards are in place to ensure that services to customers are protected regardless of issues faced by shareholders of Thames Water. Today’s update from Thames Water means the company must now pursue all options to seek further equity for the business to turn around the performance of the company for customers.”

When asked about the prospect of Thames Water going into special administration, a government spokesperson said that there were a range of options available to the company to secure new investment.

However, they added: “We prepare for a range of scenarios across our regulated industries – including water – as any responsible government would.”



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