Blow to Thames Water as preferred bidder pulls out

Thames Water has suffered a major blow in its attempt to secure its future after US private equity giant KKR pulled out of a £4bn rescue deal for the company.

The setback increases the possibility that the UK's biggest water company will collapse into a government-supervised administration.

Thames Water called the news "disappointing" but said it would proceed to work on an alternative plan, which is considered the last chance to save the company from administration.

Environment Secretary Steve Reed said the government was "carefully monitoring the situation".

Thames Water serves about a quarter of the UK's population, mostly across London and parts of southern England, and employs 8,000 people.

But it has huge debts and is struggling to fix leaks, stop sewage spills, and modernise outdated infrastructure.

Regardless of who owns Thames, its water services will continue as normal.

Thames Water is effectively owned by its lenders and a consortium of them has prepared a plan to raise equity which sources say is ready to go and fully funded.