Thames Water, Britain’s largest water supplier, is reportedly nearing a £16 billion rescue deal with its lenders, potentially averting temporary public ownership. A creditor group holding £13 billion of Thames Water’s £20 billion debt aims to finalise an in-principle agreement with the regulator, Ofwat, and the company by mid-next month. Thames Water provides water and wastewater services to 16 million customers. The company has faced scrutiny due to environmental breaches and substantial debt.
Thames Water stated it is “working constructively with stakeholders to deliver a market-led recapitalisation” and remains hopeful for an agreement. Ofwat confirmed ongoing engagement with the London & Valley Water investor group, evaluating proposals to enhance the company’s operations and financial stability. London & Valley Water, a creditor group comprised of 15 institutions like Aberdeen Investments, Elliott Management and PIMCO, has committed to maintaining ownership until 2030 as part of the rescue plan.
The proposed deal involves lenders accepting a haircut of up to 30% on their Class A debt, an increase from the previously disclosed 25%. Over £13 billion of existing value is expected to be written off when a final deal is presented to participating investors, which include Assured Guaranty, Invesco, Elliott Management, Silver Point Capital and Farallon Capital Management. In exchange, creditors would receive a minimum 10% equity stake in the recapitalised company.
An outline agreement is anticipated soon, with terms to be submitted for review. Last year, Thames Water secured court approval for a £3 billion debt lifeline, preventing collapse and state intervention. In December, the company initiated steps to schedule court dates and proceed with a recapitalisation plan led by senior lenders, pending agreement on terms with the government.
