Board members at Thames Water are locked in eleventh hour crunch talks as shareholders prepare to amend a pledge to inject funds into the company that would secure its survival.
The board at Britain's biggest water company met to discuss its financial future after months of talks involving debt and equity investors, lenders, regulators and government officials.
Shareholders have said they are unable to contribute hundreds of millions of pounds of promised funding.
It comes after Ofwat, the industry watchdog, indicated that it would not bow to the company's demands for a package of regulatory concessions.
The company is staring down billions in debtPAChancellor Jeremy Hunt has said the Treasury will monitor Thames Water’s situation “very carefully”.
He said: “Our understanding is that the company is still solvent and today’s news should not have an impact on the services received by customers.
“Obviously there are parts of the country where the service has not been up to scratch, including in my own constituency, and local MPs will continue to hold Thames Water to account in those situations, but overall we will continue to watch the situation very carefully.”
Shareholders at Thames Water, which employs around 7,000 people, and serves nearly a quarter of Britain's population, had previously indicated that they were prepared to commit £3.25billion to the company in the coming years, with the first £750million due to be injected this year.
But the company is staring down the barrel of well over £15billion worth of debt, with huge interest payments required to service it.
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Thames Water HQ in Reading
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Investors' likely decision to water down that commitment is not irreversible and could still be changed if the financial profile of a future investment improved.
Some of the concessions include a 40 per cent rise in consumers' water bills, an easing of capital spending requirements and leniency on forthcoming regulatory penalties.
Earlier this month, GB News reported that the Government has been accused of a "cover-up" for not disclosing details of a multi-billion-pound bailout plan for at-risk water company Thames Water.
The plan, codenamed ‘Operation Timber’, is being overseen by the Department for Environment, Food and Rural Affairs’ permanent secretary Tamara Finkelstein, but the public has been kept in the dark over the nature of any possible taxpayer bailout.
A shareholder bailout would also likely stave off the imminent threat of a £190million loan set to be repaid by April, which senior figures at the company fear is unpayable.
Associate director at research institute EDHECinfra Tim Whittaker said: "If this can’t be refinanced or the shareholders don’t inject more money, then there’s a very real risk Thames Water’s parent Kemble could be put into administration."
An Ofwat spokesperson said: "Ofwat does not comment on speculation.
"Thames Water needs to continue to deliver on its turnaround plan to improve its operational and environmental performance. It is for the company to secure shareholder backing to improve its financial resilience.
"We will continue to closely monitor the company’s progress as they do so to protect customers’ interests."