Thames Water Creditors Propose Enhanced £1 Billion Rescue Package
A consortium of Thames Water's major creditors has submitted an enhanced rescue proposal to regulator Ofwat, offering an additional £1 billion investment and increased debt write-offs in a bid to stabilize the utility's precarious finances and avoid nationalisation. London & Valley Water, representing the bulk of Thames Water's bondholders including Apollo Global Management and Elliott Management, has increased its debt forgiveness offer to approximately £4 billion - representing about 25% of the total debt it holds - up from 20% in previous proposals. The new package includes an extra £150 million in new equity alongside the debt relief measures.
The revised proposal comes after months of negotiations with Ofwat and represents what the creditor group describes as a "more ambitious" plan that "delivers greater value for customers." Under the terms, existing equity would be cancelled and no dividends would be paid during the turnaround period, while the consortium has committed to paying outstanding penalties as part of the rescue agreement. The creditors are seeking more lenient environmental and performance targets from the regulator in return for their increased financial commitment.
Thames Water's financial crisis has been building since June 2023, when management first requested £1 billion in fresh equity from shareholders. While investors initially agreed to inject £750 million in July 2023, they refused to provide additional promised funding in March 2024, declaring the company's business plan "uninvestable" due to regulatory conditions. The utility warned in September 2024 that it would run out of money within months without emergency funding, prompting credit rating agencies S&P and Moody's to slash its ratings amid default warnings.
The company, which supplies 16 million customers in London and southeast England, has been operating under extreme financial stress with a near-£20 billion debt burden. Chief executive Chris Weston has previously warned that turning around the company could take up to a decade. The creditor-led rescue plan aims to provide sufficient funding to tide the company over until May while avoiding the special administration regime that would effectively wipe out existing investments. Ofwat has confirmed it will review the latest proposal as Thames Water continues its race against time to secure its financial future.
