Thames Water: UK water firm explores restructuring as it scrambles to avoid collapse amid £14.7bn debt pile

Thames Water is reportedly exploring radical plans to avoid collapse as the company and its lenders are spending millions of pounds a week to work out a turnaround plan. The plan hopes to find a way to repay the UK water firm’s massive debts.

As part of urgent restructuring talks, the firm’s executives are considering breaking Thames up into two smaller companies covering London and, separately, the Thames Valley and Home Counties regions, according to The Telegraph. It is reportedly thought that dividing up the water firm would make it easier to sell its operations to a rival once the company has been stabilised. For example, Octopus Energy previously acquired rival Bulb Energy’s 1.5m customers in 2022 after Bulb spent more than a year in the government’s special administration scheme.

Britain's biggest water supplier is now scrambling to shore up its finances after its parent company, Kemble, defaulted on its debts. Shareholders have also refused to provide new funding and fears are mounting that taxpayers could be left to foot the bill if the government has to bail out the company.

Thames Water has racked up a debt pile worth at least £14.7bn. Thames has said it has £2.4bn of liquidity available and can still meet its commitments until at least May 2025. However, high borrowing costs and fines from Ofwat risk shrinking this cash pile.

According to The Daily Mail, Rothschild, the investment bank, has been hired to advise Thames Water on how to deliver its reform plan, while consultancy firm Teneo has been appointed as 'administrator in waiting' to take over in the event of a collapse. Danni Hewson, head of financial analysis at AJ Bell, told Sky News: "Such is the parlous state of Thames Water's finances it was only a matter of time before the dominoes fell.

"Its own investors have deemed the company 'un-investable' and with so much debt weighing the company down and so much becoming due the only real question is, what next?" She added that there would now be "increasing pressure on the government to intervene".

Thames Water declined to comment.