Thames Water warns its cash may run out as soon as December

The UK’s biggest water supplier is scrambling to shore up its finances, admitting it faces a shortage of cash as soon as December.

The warning from Thames Water comes as some of its biggest lenders are considering easing repayment terms as it fights for survival, with lenders concerned their loans risk being wiped out if the company is temporarily nationalised.

Talks with creditors would only allow for enough funds to last until spring next year. Any agreement would therefore mark just a step on the road to a potential restructuring – staving off the immediate risk of insolvency.

The company announced on Friday morning it was seeking fresh repayment terms, confirming it had only about £1.6bn left – underlining its precarious finances. But Britain’s biggest water company admitted it could not access all of that money without the explicit consent of the majority of its lenders, who are owed about £15bn.

Should lenders refuse consent, Thames said it will run out of available cash by the end of December. It would then enter a formal “standstill” period, where it is given breathing space from its creditors to avoid being forced into insolvency, and granted access to about £930m of the remaining £1.6bn.

Related: Thames Water trying to stay afloat by rewriting loan deals, says source

“We have been engaging with financial stakeholder groups and their advisers since July 2024 and are assisting with information requests to enable financial stakeholder groups to better understand Thames Water’s business plan and future funding needs,” it added.

The talks include discussions with a group of about 90 of its creditors, representing roughly £10bn of its more than £15bn debt pile. Lenders have considerable interest in finding a route for the company that might avoid their investments being wiped out or cut in value.

As a water supplier, should Thames run out of money it may be placed in a form of temporary nationalisation, known as the special administration regime. This is so essential services for consumers are maintained while a long-term financial fix is found.

Such a move would probably come at significant cost to the taxpayer as well as creating a political imperative to show private investors taking their share of the financial pain.

At present, the negotiations between a group of major lenders and Thames only covered temporary measures, such as extending the maturity of some of its bonds in an attempt to attract fresh investment, sources close to the discussions said. This may add to pressure on the water watchdog Ofwat’s final decision on how much bills may rise by in England and Wales, including those at Thames. This is now expected to be revealed in January.

On Thursday, a source close to Thames Water said the company had secured dates in the high court – which may prove necessary as a step to formally rewrite its agreements with lenders. They added: “We’re looking into a range of options to extend our liquidity runway. This includes delaying when some money is due back to lenders.”