Thames Water says it may have to be nationalised if talks with creditors fail

Thames Water said yesterday it could collapse into temporary nationalisation if emergency talks with creditors failed as it slumped to a £1.6bn loss.

- Julia Kollewe Helena Horton

The loss for the 12 months to 31 March comes after a profit of £154m the previous year, even though revenues climbed by 8.7% to £2.7bn. It had net debt of £16.8bn, up from £15.2bn the year before.

Thames Water, which supplies 16 million customers in London and south-east England, is scrambling to stabilise its finances and agree a rescue plan funded by its creditors as it tries to avoid temporary nationalisation.

In its annual report, Thames issued a "going concern" warning, saying "directors expect that for the recapitalisation transaction to be agreed the company will require the support of multiple stakeholders including its creditors". If it failed, Thames said, the company would consider all options "but a possible consequence would be a special administration" - in effect, nationalisation.

Chris Weston, Thames Water's chief executive, said: "We are progressing with our senior creditors' plan to recapitalise the business, which will see us return to a more stable financial foundation.

"This will come with a requirement to reset the regulatory landscape and acknowledge it will take at least a decade to turn Thames around."