Thames Water faces a race against time to avoid collapse even after securing a short-term cash injection.
The UK’s largest water company is set to run out of money as soon as September 2026 should it fail to secure a financial lifeline in the form of a recapitalisation deal.
The utility company said the second £1.5bn portion of its “super senior facility” – a type of loan or credit which gives the lenders highest priority for repayment – would provide liquidity until at least September 2026 “if and when it becomes available”.
The firm said it “intends to withdraw” parts of the first £1.5bn section of the loan to meet its forecast “liquidity needs until at least mid-December 2025”.
As of June 30 20205, Thames Water had £424m in available cash and cash equivalents. But as of August 13, the firm had withdrawn £872m from the first portion of the super senior facility loan.
Labour eyes Thames Water bailout
Thames Water is facing a crisis after private equity giant KKR pulled out of a multi-billion pound investment deal the firm was banking on to save it from its £20bn debt.
The Labour government is reportedly taking steps to prepare for a worst case scenario. Environment secretary Steve Reed has asked advisory firm FTI Consulting to stand by in case Thames Water falls into administration.
The company would be placed into a Special Administration regime (SAR) given it provides an essential public service.
But the success of ongoing negotiations point to Thames Water being able to make reduced or late payments on its loans, according to Sky News.
An SAR would ensure that some 16m people across Southern parts of England would continue to receive services, though it puts taxpayers at risk of bearing the bailout costs.