Thames Water Creditors Propose £5 Billion Rescue Package
Thames Water’s senior lenders have drafted a £5 billion financial bailout package to stabilize the UK’s largest water company as it faces increasing financial and regulatory strains. The proposal, which is under discussion, would consist of a £3 billion injection of equity by lenders who would take a stake in the business, together with £2–2.25 billion of new debt to meet short-term liquidity requirements.
The suggested package would cut Thames Water’s net debt from around £19–20 billion to around £13 billion. Under the restructuring, senior Class A bondholders have offered to write off about £3.2 billion, while junior Class B creditors will be expected to take a full loss of their £1 billion exposure.
But the deal rests largely on the approval of Britain’s water regulator, Ofwat. Creditors are asking for leniency in terms of environmental fines, such as payment deferral or lowering of around £900 million of potential fines for historical pollution incidents. They also want flexible targets for future environmental performance in order to secure the company’s financial stability.
The plan has already set off political debate, with critics cautioning that the proposal risks sacrificing environmental standards for financial stability. Regardless, proponents claim it’s a necessary measure to stave off collapse and prevent nationalization, a step the government is attempting to avoid.
If ratified, the transaction has the potential to result in significant management upheaval at Thames Water and signal the start of a sustained turnaround. Talks with Ofwat and other parties continue as the group fights to rebuild public confidence and operational resilience.
