The crisis enveloping Thames Water has deepened after its holding company announced it had been unable to meet debt repayments.
Kemble Water said it missed an interest payment that was due on Tuesday.
The firm said it had asked its lenders to take no immediate action so as to “provide a stable platform while all options are explored”.
The announcement paves the way for a potential restructuring of Thames Water, which serves nearly a quarter of Britain’s population.
Sky News revealed last week that the company’s shareholders had decided not to proceed with a promised £500m equity injection amid an impasse with Ofwat, the industry regulator.
Some of that was earmarked the pay the loans owed by Kemble Water, it is understood.
The parent company, which is entirely funded through dividends received from Thames Water, sent its formal notice of default to the holders of around £400 million of company bonds on Friday.
It added: “The company expects that it will be in a position to provide a further update in the coming weeks.”
Dutch banking giant ING is among Kemble Water’s lenders, Sky News revealed on Thursday. Two Chinese state-owned banks are also said to be involved and could play a key role in the company’s future.
They are due to be repaid £190m at the end of April, although there are growing expectations that a loan extension may be agreed.
Kemble Water’s lenders, which reportedly also include the Bank of China and Allied Irish Banks, could potentially take a stake in Thames Water if the loan is not repaid.
Thames Water provides water and sewage services to 15 million customers across London and southeast England.
When asked for a statement, Thames Water referred Sky News to Kemble Water.
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