Thames Water lenders offer £17bn plan, push Ofwat for ‘regulatory reset’
A group of Thames Water’s major creditors have put forward a sweeping, multibillion-pound rescue deal, while calling for forgiveness of historic fines from Ofwat.
Major investment firms, including Aberdeen and Elliott Management, are among the investors, who have said they have “the funding and experience required to deliver a transformation of the company’s performance which is intended to mark a departure from past failings”.
A spokesperson for the group said that the deal is “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”.
In a plea for a “clean slate”, they have called on the watchdog to write off “several billion” of debt and allow the provider a “regulatory reset”.
This intervention comes at a bleak point for relations between the government and the water industry, with Thames Water among six firms banned from handing out bonuses to top executives.
The group warned that issues that have plagued Thames Water, such as “pollution, asset health deterioration, and customer service levels are likely to worsen without a change in approach from the regulator.”
Crunch talks are ongoing, with lenders hoping that they can lock down approval for this deal by early July.
An Ofwat spokesperson said that the watchdog has been “engaging regularly” with the creditors.
Following a High Court ruling in February, this collective of creditors effectively own Thames Water, in a temporary arrangement intended to keep the provider afloat until summer 2026.
Thames Water’s troubles
The proposals follow a major blow to the embattled infrastructure giant last week as US private equity firm KKR pulled out of an equity raise in the business, in a move described by Thames chairman Sir Adrian Montague as “disappointing”.
Montague said: “The company will therefore progress discussions on the senior creditors’ plan with Ofwat and other stakeholders. The board would like to thank the senior creditors for their continuing support.”
At the time, environment secretary Steve Reed said that Thames Water has “a number” of private investors who could help the provider dodge nationalisation.
KKR pulling out was the latest episode in a torrid time for the company, which in May was hit with a historic £123m fine over rule breaches tied to its wastewater operations and dividend payouts.
Earlier in May, CityAM reported that more than 80 criminal investigations have been opened into water bosses, which could result in five year prison sentences for some executives.