Thames Water's Debt Crisis

Thames Water, the UK's largest water company, has spent more than two years trying to avoid collapse under around £18.5 billion of debt. It is still negotiating a rescue.

Last year, its main lenders agreed a £3 billion emergency loan to keep the company running. Some groups challenged the loan in court, arguing it was too expensive and that the government should take over instead, but the loan went ahead.

The same lenders then formed a group called London & Valley Water to take control of the company. Their plan in March would put around £3.35 billion of new money into the business in return for ownership, with the lenders writing off part of what they are owed and the current shareholders losing everything. Any deal would need approval from the High Court and the water regulator, Ofwat.

The government has said it could still put Thames Water into special administration, a form of temporary nationalisation, if no private rescue works. This month the lenders offered the government a golden share to give it more say over the company.

Thames Water's lenders now hold the strongest position in the negotiations, but the government's power to step in sets the limits of any deal they can reach.