Thames Water says it will run out of cash in March as it fights to avoid a taxpayer bailout

Thames Water has revealed it only has enough cash to survive until March.

Britain’s biggest water supplier is struggling to avoid a taxpayer bailout amid mounting losses and debt.

The group is bracing for a week of crisis as it desperately tries to secure a £3bn bailout package from its creditors.

And regulator Ofwat will also rule next week on whether the debt-ridden company can increase customer bills by 59 per cent over the next five years.

Boss Chris Weston said yesterday that Ofwat’s decision, which will be published on Thursday next week, was “fundamental” to the future of the struggling company as it searches for a new owner.

He rejected calls for an immediate winding up of the company, saying he was confident Thames Water would receive a £3bn loan from its creditors.

The loan – agreed by more than three-quarters of its main creditors – is subject to its first court hearing on Tuesday next week, with a second date scheduled for January.

Not all lenders have accepted the rescue package, and some smaller creditors refuse to back the plan.

Without the funding, which will be paid in installments, Thames Water only has enough money to survive until March.

This has revived concerns that the supplier may need to be bailed out by the Government in a process known as special administration.

The loan, which will charge an interest rate of 9.75 percent, well above market rates, would allow the company to continue operating until May 2026, by which time it hopes to have completed the search for a new owner.

Weston said he was “very comfortable” with the level of interest shown by potential share bidders.

A £5bn proposal put forward by Covalis and French utilities group Suez would see the utility split up and the remaining part listed on the London stock market.

It could see the company spinning off entire regions such as the Thames Valley.

Meanwhile, a separate bid from Castle Water, a company co-owned by Conservative Party treasurer Graham Edwards, would pump around £4bn into Thames Water in return for a majority stake, with a plan to list on the stock market within three years. .

Other potential bidders for the debt-laden utilities business include Hong Kong-based CK Infrastructure Holdings, which owns Northumbrian Water.

The CEO declined to say whether the company had received additional offers. “They are credible parties and we will continue to work with them,” Weston said.

But Sharon Graham, general secretary of the Unite union, said “corporate vultures” are “looking to strip them of assets”.

Final offers will be submitted in January following Ofwat’s decision on bill increases.

If Thames Water disagrees with Ofwat’s findings, it has two months to lodge an appeal with the Competition and Markets Authority (CMA).

The watchdog would then have between six and 12 months to issue a decision.

Net debt hit £15.8bn for the six months to the end of September, up from £14.7bn a year earlier, according to Thames Water’s latest accounts.

The company posted a loss of £189.7 million, compared to a profit of £172.3 million in 2023.

Thames Water attributed the slide into the red to £426.7m in one-off “exceptional items”, including around £51m given to advisers as it sought to secure an emergency funding package.

Weston, who joined the company in January, said: ‘Over the last six months we have made solid progress in the transformation and recovery of Thames Water.

‘We have achieved key milestones in establishing a more stable financial platform, agreeing to a liquidity extension transaction proposal and advancing our capital raising process.

“The next critical step is to receive a final determination on the ability to invest, which is critical to our future.”