LONDON — British Treasury officials are drawing up contingency plans to rescue Thames Water later this month amid fears the stricken provider could go into special administration.
The debt-laden water company, the U.K.’s biggest supplier, has secured a £3 billion, privately-funded rescue loan facility. But it cannot access any of the funds because of a court case brought forward by Liberal Democrat MP Charlie Maynard and some of the firm’s creditors.
The case will be heard between March 11 and 13 in the High Court, but there is no date set for a ruling.
According to two people with knowledge of the situation, granted anonymity by POLITICO to speak about sensitive matters, Thames Water will run out of money if there is not a resolution to the case by March 24 — which would mean the company crashing into special administration.
Treasury officials met on Wednesday to game-plan this scenario and draw up plans for a temporary rescue of Britain’s largest water firm.
Thames Water has said in the past it needs £2 billion a year to function, which would provide yet another headache for Britain’s cash-strapped Chancellor Rachel Reeves as she prepares to slash public spending in other areas.
A British government spokesperson said: “The company remains stable and the government is closely monitoring the situation. It would be inappropriate to comment further on ongoing legal proceedings or private company financial matters.”
One of the people involved in the situation said the Treasury “is only just waking up to the fact that this is now a reality. They assumed market-based rescue was possible.”
Public outrage
Thames Water is Britain’s largest water firm, serving around 16 million people.
It has been at risk of collapse for the past 18 months, after falling into around £19 billion of debt.
The company has also been criticized for overseeing record amounts of sewage dumps into rivers and seas in the U.K.’s previous years, with critics blaming long-term underinvestment in the company’s water infrastructure.
Thames Water’s financial woes are broadly due to a combination of heavy borrowing and recurrent dividends paid to shareholders.
Thames Water says high inflation has also increased its debt obligations. They also point to recent investment into water infrastructure, which came after public outrage about recent sewage dumps.
The Liberal Democrats, Britain’s third party, successfully made the state of the country’s waterways a key election issue.
They won many seats in traditional Conservative areas with links to major rivers or waterbeds and have called for Thames Water to be placed into special administration.
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