Thames Water has warned that crisis talks with lenders to secure its future are taking “longer than expected” and will extend into 2026, raising the prospect of a collapse into government control. Britain’s biggest water company reported a profit of £414 million for the six months to September, compared with a loss of £149 million in the same period last year, driven by a 31% rise in customer bills.
Despite the profit, the company said there is “material uncertainty” about its ability to continue as a going concern. A collapse into a special administration regime (SAR) – a form of temporary nationalisation – “could occur in the very near term” if it fails to agree terms with its controlling lenders.
The creditors have asked the regulator Ofwat and the government to waive future pollution fines, arguing that the prospect of hundreds of millions of pounds in extra costs makes a turnaround impossible. The standoff has already lasted months longer than expected, with talks originally due to conclude by the end of 2024.
Revenues rose 40% to nearly £2 billion after a 31% bill increase in April. The company insisted it was making operational progress, with a 22% rise in investment to £1.26 billion. However, Thames Water has struggled under £17.6 billion of net debt, built up since privatisation, and has been dogged by poor environmental performance and sewage leaks.
The company came close to being taken into temporary government control earlier this year after securing court approval for a £3 billion emergency funding plan. It is now working on a second deal to restructure remaining debts and transfer ownership to lenders, led by hedge funds including Elliott Investment Management and Silver Point Capital.
Thames Water paid £57 million in fees to advisers during the period. The government has so far resisted granting regulatory leniency, but ministers are also keen to avoid taking control under an SAR. Chief executive Chris Weston said the company is making “good progress” operationally and working to secure a “market-led solution”.
