The board of Thames Water, Britain's largest water company, found itself in urgent discussions on Wednesday as shareholders declined to confirm their commitment to provide approximately

£3 billion in fresh equity essential for the company's survival.

Thames Water, responsible for delivering water and sewage services to about a quarter of the UK population, awaited assurances from shareholders regarding additional equity injection during a board meeting extending into Wednesday evening, according to two sources familiar with the matter.

One individual involved in the discussions noted the fluidity of the situation, suggesting a potential company announcement by Thursday.

Thames Water is striving to evade special administration under the government's oversight, although ministers remain prepared for the prospect of its collapse.

With £18.3 billion in group debt, Thames Water faces escalating financial pressure due to increased interest rates. Shareholders had previously agreed to invest £750 million this year and over £3 billion by 2030, contingent upon specific conditions.

The company is pressing industry regulator Ofwat for substantial hikes in water tariffs, leniency on regulatory penalties, and assurance of continued dividend payments.

However, shareholders, including pension funds Omers and USS, as well as Chinese and Abu Dhabi sovereign wealth funds, express dissatisfaction with the progress of negotiations with Ofwat.

Described as a high-stakes standoff between the regulator and the government, Thames Water's shareholders demand improved returns in exchange for further equity investment.

Last year, Ofwat initiated an inquiry into a £37.5 million dividend issued by Thames Water to its parent company Kemble, which relies solely on revenues from Thames Water customers to service its debts. Kemble urgently needs to refinance a £190 million loan due by the end of April.

Amid market concerns about the company's future, a publicly traded Kemble bond maturing in May 2026 was trading at 26 cents on the dollar on Tuesday afternoon.

Despite government optimism about restructuring group debt or attracting new investors to recapitalize the regulated operating business in the event of Kemble's collapse, some legal experts and investors remain skeptical, suggesting that Thames Water's problems may be too deeply rooted to resolve.

Requests for comment from Thames Water and Kemble went unanswered at the time of reporting. Photo by Jim Linwood, Wikimedia commons.