Fresh crisis for Thames Water as investors pull plug on £500m of funding

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Fresh crisis for Thames Water as investors pull plug on £500m of funding

The decision heightens the likelihood of nationalization and casts doubt on the financial viability of the largest water company in the UK.

With investors at Thames Water having cut off £500 million in emergency finance, questions have been raised about the financial viability of the largest water provider in the nation and the likelihood of nationalization has increased.

The embattled utilities firm revealed this morning that, due to the company’s failure to meet certain requirements, its owners had declined to contribute the first tranche of £750 million intended to safeguard its short-term cash flow.

The likelihood that Thames Water may be placed under special administration, whereby the government intervenes and briefly renationalizes the corporation, is increased by the financial failure.

Thames Water CEO Chris Weston stated on Thursday that this was “a long way off,” but he did not completely rule it out.

Thames Water, which acknowledges in its business plan that they have been “sweating assets,” was responsible for 163% of the time that sewage was dumped into rivers because their aging infrastructure was unable to handle the amount of rainfall.

Thames is also in the center of a significant investigation into sewage dumping from its treatment plants by Ofwat, the water regulator for England and Wales. The probe might result in the corporation facing significant financial penalties.

Thames Water had committed £750 million in finance in July, with the first installment scheduled for March 31.

 

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