The heavily indebted company, which supplies about a quarter of the British population, has been under the scrutiny of the new Labour government, given its precarious finances and track record of spilling sewage into rivers.

Thames Water could be nationalised under a special administration regime if it cannot secure new funding.

"I can't put any probability on whether it will or won't happen but it is a long way off if it were to happen," CEO Chris Weston said on Tuesday.

Jim McMahon, a junior minister in the housing, communities and local government department, said the sector needed tougher regulation.

"The water industry will have to reform. The regulation around it will have to be looked at, and we have to see more investment going forward," he told the BBC. "Thames really do need to look at their own house and get it in order."

Regulator Ofwat will make an initial decision on how much Britain's water companies can raise bills on Thursday, before a final ruling on Dec. 19.

HIGHER BILLS

CEO Weston, who is seven months into the job, needs the regulator to allow it to raise customer bills by 40%, excluding inflation, over 2025-30 to pay for infrastructure improvements.

Thames' ability to raise new equity and debt will depend on Ofwat's decision. It needs equity of 3.25 billion pounds over the next five years and said formal talks would begin in autumn.

"It won't conclude until the beginning of next year at the earliest," Weston said, adding there was "interest" in the market.

A "supportive determination" from Ofwat would be helpful but Weston did not expect the next few months to be straightforward.

"Draft determination, as I said, is a point in time. We will continue to work with Ofwat over the coming months to make our case again," he said.

The government wants Ofwat to ensure consumers get value for money. But Thames Water argues investors need to make returns in upgrading infrastructure which is more than 100 years old to cope with a growing population and climate change.

The company is struggling with 15 billion pounds ($19.21 billion) of debt. Its current owners said in March they would not provide a 500-million pound equity lifeline, calling it "uninvestible".

Thames Water said its liquidity of 1.8 billion pounds was sufficient to keep funding operations until the end of May 2025.

For the year to the end of March, it swung to a post-tax profit of 140 million pounds from a loss last year, but the number of pollution spills rose.

Thames Water's nine shareholders include Ontario Municipal Employees Retirement System, the UK's Universities Superannuation Scheme, a unit of the Abu Dhabi Investment Authority and the China Investment Corporation.

($1 = 0.7809 pounds)