Thames Water creditors submit latest rescue plan

(Sharecast News) - Lenders to Thames Water have submitted a fresh rescue plan for the embattled utility, it was confirmed on Thursday, as they look to stave off nationalisation and turn the company around. Under the proposals, which have been submitted to regulator Ofwat, about a third of Thames Water's £20bn debt pile would be written off, while around £5.4bn of new equity and debt would be injected to help stabilise its finances.

Existing equity will be cancelled, and no dividends will be paid during the turnaround period.

In return, the senior creditors are seeking more lenient environmental targets from Ofwat.

The plan has been drawn up by London & Valley Water, a consortium of the utility's larger financial institutions and investors, including Apollo Global Management and hedge fund Elliott Management. The consortium owns the bulk of Thames Water's bonds.

Thames Water has been on the brink of collapse since March 2024, when its original investors refused to put extra equity into the business, calling it "uninvestable".

Thames Water has faced criticism for paying out dividends and building up debt while failing to invest in aging infrastructure.

Its performance record has also long been dire, including multiple leaks and sewage discharges, despite being repeatedly fine by Ofwat.

London & Valley has said it would pay its outstanding penalties as part of the rescue deal, which was submitted to Ofwat after months of discussions with the negotiator on Wednesday.

Ofwat has confirmed it will now review the plan.

Thames Water supplies 16m people in London and the south east with water and sewage companies. In July, chief executive Chris Weston said the company remained "extremely stressed" and warned it could take up to a decade to turn around.