Thames Water creditors table £17bn rescue plan

(Sharecast News) - A group of Thames Water creditors have proposed injecting billions into the stricken utility, it emerged on Tuesday, in exchange for regulatory leniency. The creditors, which include Aberdeen, Elliott Management, Silver Point Capital and BlackRock, have submitted their plans to Ofwat.

They have pledged to invest £3bn in new equity, raise a further £2bn and overhaul £17bn of Thames Water's debts.

The rescue package would lead to the "largest financial loss suffered by investors on an infrastructure asset in British history", the creditors claimed.

However, in return they want the regulator to weaken both performance targets and compliance.

They warned that without the "regulatory reset", Thames Water's "pollutions, asset health deterioration and customer service levels are likely to worsen".

Last week US private equity firm KKR pulled out of a £4bn rescue deal, throwing the future of Thames Water once more into doubt.

The company, which has 16m customers, has built up debts of around £20bn. It has been on the brink of bankruptcy ever since March 2024, when its original investors refused to put extra equity into the business, calling it "uninvestable".

It has also faced criticism for paying out dividends and building up debt while failing to invest in its aging infrastructure. Thames Water's performance record has long been dire, including multiple leaks and sewage discharges.

A spokesperson for the class A creditors said the proposals were "designed to fix the root causes of Thames Water's problems, restore its balance sheet, rebuild customer trust and provide the financial investment and operational capabilities to fix the fundamentals of the business once and for all".

Ofwat said it would now review the submission. "Our focus is on assessing whether the plans are realistic, deliverable and will bring substantial benefits for customers and the environment," it said.

Thames Water recently secured a £3bn emergency loan, after warning that it was poised to run out of cash in a matter of weeks. The loan means it can now keep running until summer 2026.

However, on Monday it emerged that senior management had been set to receive £18.5m in retention payouts from the loan.

The payments were paused after complaints from politicians on the House of Commons environment, food and rural affairs committee.