If the company is put into special administration, it is estimated that as much as £5bn of financial support would be needed to keep customers connected.
Thames said last October that shareholders were prepared to provide £750m “subject to satisfaction of certain conditions, including the preparation of a business plan that underpins a more focused turnaround that delivers targeted performance improvements for customers, the environment and other stakeholders over the next three years and is supported by appropriate regulatory arrangements”.
In a prospectus published last year, the company said there was no certainty the money would be received in 2024. Government officials have been working on contingency plans for the rescue of Thames in recent months, under the code name “Project Timber”.
There is concern that Ofwat risks tipping the business over if it levies fines for poor performance.
Sir Robert Goodwill, the Conservative chairman of the environment committee, said last month that MPs were concerned it may not be in Ofwat’s interest “to use the full extent of its powers given the impact that the failure of a major business would have on the stability of the sector and the public purse”.
He said: “We have real concerns that Ofwat’s enforcement powers place it in a situation whereby enforcing regulations and issuing fines against consistently failing entities will place a further financial burden on these entities and increase the risk of corporate failure.”
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
