When the company was privatised in 1989, it had no debt. But over the years it borrowed heavily and is currently £15.2bn in debt, by one measure.
A large proportion of that was added when Macquarie, an Australian infrastructure bank, owned Thames Water, reaching over £10bn when the company was sold in 2017.
Analysts say Thames Water’s current debt amounts to about 80% of the value of the business, making it the most heavily indebted of England and Wales’ water companies.
Also, interest payments on more than half of Thames’ debt rise with inflation, which has been high in recent years, adding to the firm’s woes.
Macquarie said that it invested billions of pounds in upgrading Thames’s water and sewage infrastructure while it owned the company.
But critics argue that it took billions of pounds out of the company in loans and dividends – which is a share of a business’s profits that is paid to shareholders.
Thames Water said that it has not paid dividends to external shareholders since 2017.
However, dividends can also be used to move money around companies that are ultimately owned by one parent company.
Thames Water has paid over £200m in dividends to other companies within the group in the past five years.
Most of this money has then been paid as interest to outside investors who have loaned the group money.
Critics argue that the dividends were paid with money that could have been spent on improving Thames Water’s infrastructure and services. However, Thames Water is legally obliged to make those debt interest payments. The company says it has enough cash until the end of May next year.
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