(Bloomberg) -- Thames Water Ltd’s holding company Kemble Water Finance Ltd was downgraded further into junk territory by Fitch Ratings Inc., increasing the firm’s risk to default on a loan nearing maturity.

The downgrade reflects that Kemble will have to engage with a group of banks to amend and extend a £190 million ($241 million) loan facility due in April next year, Fitch analysts said in a report on Thursday. 

Thames Water has been at the center of an industry-wide crisis this year as calls from the public and politicians to stop releasing sewage into waterways coincided with soaring debt costs. 

Read more: Thames Water Nationalization Risk Remains, Regulator Says

Meanwhile, Kemble’s financial position relies on dividends being upstreamed from Thames Water’s operating companies. As the UK’s largest water utility has come under increased regulatory and political scrutiny because of its heavy debt pile, Kemble faces more complicated access to capital markets and therefore, potential liquidity pressures, Fitch said in its note. 

“Thames Water Utilities Limited is in a solid financial position,” the utility said in response to an email seeking comment. A representative for Kemble didn’t immediately respond to a request seeking comment.

Kemble’s auditors in its latest annual reports have said that the parent company may run out of money by April if shareholders don’t inject more equity, warning of a “material uncertainty” about whether the company can continue to operate as a going concern.

Earlier this month, David Black, chief executive officer of the Water Services Regulation Authority, or Ofwat, told the committee the utility faces being taken into a special administration regime, a form of nationalization. A key point is if the company makes dividend payments to service £500 million ($628 million) of debt to Kemble Water Holdings Ltd. that is being cascaded down a complex corporate structure as equity, Black said.

Kemble’s debt structure also includes £400 million of public bonds due in 2026, which are currently quoted at a price of 50 pence on the pound, according to CBBT pricing compiled by Bloomberg.

 

--With assistance from Eamon Akil Farhat and Priscila Azevedo Rocha.

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