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Thames Water said it could survive for another 12 months but warned of “material uncertainty” over its long-term future as it seeks to avoid renationalisation.
The UK’s biggest water and sewerage company said in its annual report on Wednesday that it was “reasonable to assume” it would have “adequate resources” to continue its operations for the next 12 months.
But the group’s directors cautioned that there was “material uncertainty” over the company’s ability to secure enough liquidity to see it through to a successful recapitalisation. Thames Water said it had just £588mn of liquidity left as of June, enough to see it through to the last quarter of 2026.
Thames Water, which serves 16mn customers, has been teetering on the brink of collapse, weighed down by huge debts and in effect in the hands of creditors since shareholders walked away in 2024. The company’s gross debt has grown to more than £19bn.
Senior creditors, which own the bulk of the debt pile, have been locked in negotiations with sector regulator Ofwat for more than a year as they attempt to take formal ownership of the company. If a deal with creditors is not reached by the beginning of October, the company will need a further £2.4bn to get through the end of 2027.
Ofwat must submit any deal with creditors to a three-month public consultation, and it will also have to be signed off by the High Court.
Thames Water is trying to avoid being renationalised under the government’s special administration regime (SAR), a process that would place it in the hands of an independent insolvency practitioner that would ensure services keep running and staff continue to be paid.
The arrival of Andy Burnham in Downing Street next week has cast further doubt over Thames Water’s future. Burnham, who is set to succeed Sir Keir Starmer as prime minister on Monday, has said that “public ownership is absolutely an option” for the utilities. “I would say for Thames Water, that is what should be done.”
Environment secretary Emma Reynolds last month said the plan submitted by the group of senior lenders was not “good enough” and that “we stand by for any outcome”, raising the prospect that the government could take over the utility.
Senior creditors, including Silver Point Capital and Elliott Management, have offered to inject £3.35bn of new equity into the utility and provide £3.25bn of fresh debt, which could be further topped up.
Although they would prefer to avoid temporary nationalisation, the creditors would bid to buy Thames Water out of the SAR, according to people familiar with their thinking.
Under the creditors’ terms, which are being reviewed by Ofwat, the company would be allowed to avoid certain new penalties over the next four years in exchange for a £700mn commitment by investors. This would be used to improve assets, according to people familiar with the matter.
But the regulator has been unable to reach a decision on the deal. There are concerns over the cost of the debt — some of which comes at interest rates of almost 10 per cent — and the leniency over penalties.
Thames Water chief executive Chris Weston was paid £1.16mn in 2025, including £99,000 in variable pay, according to the company’s full-year results. The utility paid insolvency practitioners AlixPartners more than £2mn in compensation for Julian Gething’s role as the company’s chief restructuring officer.
Reynolds said: “It’s outrageous that one of the worst-performing water companies is handing out bonuses and inflation-busting pay rises to its executives.”
Thames Water last week had its credit rating pushed further into “junk” territory by Moody’s, with the agency saying it expected greater losses for the group of senior creditors “primarily driven by the government’s response” to their proposed deal.
