Thames Water bidder drops out of plans to refinance Britain's largest water company

The company was privatised in 1989 with no debt; however, it is now in debt for £22.8billion.

Thames Water serves 16 million customers in the UK and was banking on American firm, KKR, investing over £3billion of new equity to keep it operating.

"KKR has indicated that it will not be in a position to proceed," Thames Water said in a statement.

Chairman of Thames Water, Sir Adrian Montague, said the news is "disappointing", and the company will now proceed with discussions amongst other senior creditors.

Montague added: "Whilst today's news is disappointing, we continue to believe that a sustainable recapitalisation of the company is in the best interests of all stakeholders and continue to work with our creditors and stakeholders to achieve that goal.

"The company will therefore progress discussions on the senior creditors' plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support."

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In February of this year, Thames Water secured a £3billion loan to restructure after being £19billion in debt at the time.

The loan effectively stopped it from being renationalised and falling under Government control. However, the company still needs significant ongoing financial support to stabilise its finances.

The Shadow Business and Trade Secretary, Andrew Griffith MP, told GB News: "There has been a real regulatory failure of the water industry for many years.

"It reminds us that setting up a regulator... is not an answer."

It follows Thames Water being fined £122.7million after an investigation conducted by the UK's water regulator Ofwat found a severe breach of rules when it comes to the company's operations.

This represents the largest fine ever issued by Ofwat, with the body citing Thames Water's wrongdoing when it comes to its wastewater operations and handling of dividend payments.

David Black, the Chief Executive at Ofwat, said: "This is a clear-cut case where Thames Water has let down its customers and failed to protect the environment. Our investigation has uncovered a series of failures by the company to build, maintain and operate adequate infrastructure to meet its obligations.

"The company also failed to come up with an acceptable redress package that would have benefited the environment, so we have imposed a significant financial penalty.

"This decision provides certainty for the company for both its past failures and what we expect from the company to comply with its obligations in future.

"[Thames Water] is seeking new buyers to fund its turnaround to provide better services for customers and the environment by improving operational performance and financial resilience. This provides a clear opportunity to break with the past. Thames Water will now need to correct the issues our investigation has identified."

Environment Secretary Steve Reed said the Government is "keeping a very close eye" on the situation at Thames Water.

Reed told LBC: "The Government is clearly keeping a very close eye on what's going on. We're monitoring the situation, but there's no disruption to the water supply. Thames has got a number of options that they're exploring."

He said that Thames Water is "a stable ongoing company... as things stand".

Reed added: "If the circumstances happened with any company, any water company, where there was a breach and it would need to be put into special administration, that would happen but, as things stand, that's not applying to any company right now."