Thames Water, Britain’s largest water supplier, has warned that it could run out of cash by March 2025 unless it secures court approval for an emergency £3 billion financial lifeline. The company stated on Tuesday that its funds may be “exhausted” without this critical liquidity extension, leaving it at risk of temporary nationalisation.
The heavily indebted utility reported worsening environmental performance, including a 40% rise in pollution incidents between April and September 2024. The company recorded 359 pollution incidents during the six-month period, which it attributed to unusually wet spring and summer conditions.
Thames Water CEO Chris Weston acknowledged the challenges, stating, “Record rainfall and groundwater levels in our region have unfortunately led to an increase in pollutions and spills.” The water industry has faced widespread public criticism over sewage spills into the UK’s rivers and seas, intensifying scrutiny of companies like Thames Water.
Financial Struggles and Critical Deadlines
Thames Water’s financial troubles are compounded by rising debt, which has reached £15.8 billion for its operating company as of September 2024, up from £14.7 billion a year earlier. Its total debt is reportedly over £19 billion. The company has two crucial court hearings scheduled on 17 December 2024 and 20 January 2025 to secure approval for the liquidity extension, with some creditors already agreeing to lend the required funds.
If approved, the deal would provide sufficient cash flow until October 2025, allowing Thames Water to continue supplying its 16 million customers across London and the Thames Valley. The company is also seeking to raise £3.25 billion in new equity to fund essential investments through 2030.
Public and Political Backlash
The company’s environmental performance has drawn sharp criticism, with a significant rise in sewage spills fueling public anger. Tim Farron, the Liberal Democrats’ environment spokesperson, called for government intervention, stating, “This latest shocking rise in sewage spills must be the final straw for Thames Water. The government must put this broken firm into special administration to give customers the fair deal they deserve.”
Pressure group Surfers Against Sewage echoed these sentiments, with CEO Giles Bristow commenting, “Yet more excuses from Thames Water for another period of shocking sewage performance. What have their customers’ bills been going towards?”
Bonuses Amid Crisis
The company’s decision to award bonuses to senior staff has also sparked controversy. Despite its financial and environmental struggles, Thames Water paid out £770,000 in bonuses, including a £195,000 payout to CEO Chris Weston for his first three months in the role. Weston defended the bonuses, saying, “We need to attract talent to this company. If we don’t offer competitive packages, people will not come and work at Thames, and that will not solve the problem.”
Future Outlook and Potential Bidders
Thames Water has reported some progress in stabilizing its financial position. Weston stated, “Today’s news demonstrates further progress to put Thames Water on a more stable financial footing as we seek a long-term solution to our financial resilience.”
Potential investors have shown interest in the company’s future. Covalis Capital, a UK infrastructure investor, has proposed a £1 billion upfront investment and plans to raise £4 billion by breaking up and selling parts of the business. Other potential bidders include CK Infrastructure Holdings of Hong Kong, which owns Northumbrian Water and Castle Water.
Thames Water’s underlying first-half profits rose 14% to £715 million. However, the company is seeking a 52% increase in customer bills as part of a five-year plan, which the water regulator, Ofwat, will rule on in December 2024.
