Government Considering Contingency Plans for Collapse of Thames Water Amid Debt Concerns

The government and industry regulator Ofwat have started discussions about placing Thames Water into a special administration regime (SAR) that would effectively take the company into temporary public ownership, as was done with the energy supplier Bulb in 2021.

Thames Water serves 15m customers across London and the south-east of England and has faced pressure in recent years due to its poor record on leaks, sewage contamination, executive pay, and shareholder dividends.

The company's chief executive, Sarah Bentley, resigned with immediate effect on Tuesday, citing the foundations of the company's turnaround.

However, the company is still facing crunch talks over its finances, and regulators have sought advice from restructuring experts in recent weeks.

Thames Water, a water company in Britain, has been fined several times and is facing regulatory probes.

Its board has limited financing options as nearly £1.4bn of bonds mature by the end of next year, and Ofwat price controls mean water companies have little scope to generate additional income.

The company has agreed to inject £1bn of additional equity funding, and shareholders have committed to holding meetings to obtain approval for the funding.

The company has not paid a dividend for six years, and critics have called for mutual ownership structures to be considered.

Tens of billions of pounds have been handed to shareholders since privatization, causing public and political anger.