Thames Water bonds plunged in value on fears London's water supplier won't be able to repay them due to a liquidity crisis that came to a head overnight.
In a statement, Thames said it was “continuing to work constructively with its shareholders in relation to "further equity funding".
The utility raised £500mln from shareholders only three months ago and investors are said to be baulking at putting up any more cash.
Press reports overnight were that the government is drawing up contingency plans for the group’s administration over fears over its ability to service the £14bn debt pile.
The company stressed it continues to maintain a strong liquidity position, including £4.4bn of cash and committed funding, as of 31 March 2023.
According to the reports, ministers and Ofwat, the industry regulator, have held talks about the possibility of placing Thames Water into a special administration regime that would effectively take the company into temporary public ownership.
Such a process was used when energy supplier Bulb collapsed in 2021.
On Tuesday, Sarah Bentley, the Thames chief executive for the last three years, resigned with immediate effect though gave no hint anything was awry stating "The foundations of the turnaround that we have laid position the company for future success to improve service for customers and environmental performance."
Thames Water is owned by a consortium of pension funds and sovereign wealth funds, many of which are understood to be sceptical about additional funding, according to Sky.
The company's largest shareholder is the Ontario Municipal Employees Retirement System, which holds a stake of nearly 32%, according to Thames Water's website. Others include China Investment Corporation, the Universities Superannuation Scheme and Infinity Investments.
Thames Water, which serves 15mln customers across London and the southeast of England and has come under intense pressure in recent years because of its poor record on leaks, sewage contamination, executive pay and shareholder dividends.
(updated with Thames Water response)