Thames Water unveils proposals to push back debts due amid rescue deal talks
Thames Water has unveiled plans to push back more than around £12 billion of its debts due until March 2028 in a move that would provide breathing space as it looks to secure a rescue deal.
The UK’s biggest water group – which is struggling under a debt mountain of over £20 billion – said the planned deal will extend repayments on debts that were due in March 2027 for another year. So far creditors representing more than £12 billion have signed up to the agreement, with Thames Water hoping to get further support from lenders. It comes just weeks after Thames Water announced its controlling lenders agreed another £2.4 billion of funding to save it from running out of cash at the year end. The funding comes on top of an existing £3 billion emergency loan and has given it enough money to keep running until autumn 2027.
Together with its latest announcement on debt repayments, this has extended the runway needed for Thames Water to strike a rescue deal. Thames Water said: “The signing of the transaction support agreement is an important milestone in Thames Water’s progress towards a recapitalisation.
“As at the time of this announcement, creditors certifying that they represent in excess of £12 billion of secured debt have entered into the transaction support agreement. A process is ongoing to facilitate further creditor accessions to the transaction support agreement.”
If put in place, the plans “will afford the company additional time to agree the terms of a future recapitalisation of the Thames Water group and will support the continued delivery of the company’s record AMP8 capital investment programme focused on improvements for customers and the environment”, it added.
A consortium of more than 100 creditors, who collectively own about £17 billion of Thames Water’s debt mountain of over £20 billion, are in discussions with regulator Ofwat and the Government over a £10 billion deal to avoid the supplier being nationalised. The rescue plan by the consortium, called London & Valley Water, is seen as the final realistic option to avoid Thames Water being placed into a special administration regime after a previous rescue deal with US private equity giant KKR collapsed in May last year. London & Valley Water (L&VW) have already been sent back to the drawing board after former environment secretary Emma Reynolds warned in June she did not believe their £10 billion plan for Thames Water went far enough to protect customers or the environment. They are now working on new proposals for the deal, which are expected to be put forward to Ofwat before the end of the year. Thames Water said discussions with creditors “remain ongoing and, at this stage, the company’s board, Ofwat, other regulators and relevant investment committees have made no decision to accept and take forward any proposal from L&VW to implementation”.