Thames Water could collapse as it battles piles of debt

Seeking to raise cash from investors, the water provider currently has a £14 billion debt pile due to increased interest rates.

With fears, that it could collapse, Work and Pensions Secretary Mel Stride said there were “contingency plans in place for any eventuality.

It comes as several reports suggested concerns about Thames Water’s finances had now broadened to other firms in the industry.

The Times reported that a Whitehall source said: "A lot of these companies are highly geared and struggling.

“There is a worst-case scenario where other companies end up in the same place as Thames Water.”

Thames Water is looking for more money. (Image: PA)

Thames Water could collapse amid debt pile

A Government source pointed out that industry regulator Ofwat raised the issue in December in its 2021/22 Monitoring Financial Resilience report, with Thames Water, Southern, Yorkshire, SES and Portsmouth mentioned.

Thames Water is now seeking to raise cash from investors as it struggles under a £14 billion debt pile, with the Government said to be laying the groundwork for the firm’s emergency nationalisation.

The utility giant is the UK’s biggest water supplier, serving people across London and the South East.

Speaking of the issue, a statement from Ofwat read: "Ofwat will continue to keep companies’ financial resilience under close scrutiny and work with companies to ensure they take action to ensure that they have the financial backing to deliver for customers and the environment.”

Thames Water chief executive Sarah Bentley stepped down with immediate effect on Tuesday (June 27) amid mounting worries over the financial stability of the company.

The firm is now reportedly racing to raise £1 billion from investors to shore up its finances, with AlixPartners said to be advising the firm on turnaround plans.

Thames Water – owned by a consortium of pension funds and sovereign wealth funds – has come under pressure in recent years over its poor performance in tackling leaks and sewage contamination, while facing criticism for handing out big rewards to top bosses and shareholders.

The group’s shareholders include Chinese sovereign wealth fund China Investment Corporation, UK private pension fund the Universities Superannuation Scheme, and Abu Dhabi Investment Authority subsidiary Infinity Investments.