Thames Water, the largest water supplier in the UK, will have incurred almost £2bn in financing costs and advisory fees over the 18 months to the end of September.
This revelation adds to the growing concerns about the sustainability of keeping the utility in private ownership.
Between April 2025 and the end of September, Thames Water will have incurred £1.6bn in gross financing costs, according to its last annual report and projections shared with the Financial Times.
The utility also had £235m in exceptional expenses, including advisory, legal, and professional fees, in the year ending March, with projected costs for the following six months expected to reach about £100m.
These figures highlight the financial strain on the heavily indebted utility under its current ownership.
The situation is likely to be an early challenge for Prime Minister Andy Burnham’s Labour government, as Thames Water faces the threat of renationalisation.
READ MORE: UK Government responds to petition against MOD asylum centre plans
(Image: Andrew Matthews/PA Wire)
Thames Water is currently controlled by creditors, including US hedge fund Elliott Management and private capital group Silver Point, after its previous owners abandoned the business in 2024, labelling it “uninvestable”.
The government now faces a decision on whether to permit Thames Water to proceed with an expensive private restructuring or place it into a Special Administration Regime (SAR), a form of temporary renationalisation.
Under an SAR, an independent insolvency practitioner would maintain services while the company’s substantial debt and interest payments are suspended.
This move would allow funds from customer bills to be directly invested into sewage and water infrastructure, rather than servicing the debt.
Ian McNuff, a former adviser to private equity firm Star Capital and a water campaigner, argued that the figures reveal the actual cost of avoiding government intervention, suggesting that creditors may exaggerate the disruption of an SAR.
Angela Eagle, the environment secretary, has previously stated that triggering an SAR is legally complex because the utility is not yet “technically insolvent”.
The cost of temporarily nationalising Thames Water under an SAR is debated.
Thames’s advisers estimated the process would cost the government about £4bn, while others argue this figure is inflated considering the Treasury’s ability to recover cash and redirect interest payments.
Thames Water’s creditors, who have been negotiating with the government for over a year regarding their formal takeover plan, are preparing a revised proposal for the regulator Ofwat.
This follows concerns raised by the former secretary of state Emma Reynolds over a previous offer from creditors.
The offer involved injecting £3.35bn of new equity and providing up to £6.55bn in new loan facilities to Thames, while facing a 30 per cent reduction in the value of their debt.
#Thames #Water #hit #2bn #finance #advisory #fees