Thames Water pushes back £12bn debts as rescue deal talks continue

Struggling supplier wants breathing space as creditors back the move and rescue deal talks with Ofwat press on

Thames Water has announced proposals to defer some £12 billion worth of debts originally due until March 2028, in a move providing the troubled supplier with crucial breathing room as it seeks to finalise a rescue package.

The nation’s largest water company – grappling with a debt burden exceeding £20 billion – confirmed the proposed arrangement will push back repayments on obligations that were scheduled for March 2027 by a further 12 months.

Thus far, creditors holding more than £12 billion have committed to the arrangement, with Thames Water aiming to secure additional backing from lenders.

The development follows just weeks after Thames Water revealed its controlling lenders had approved another £2.4 billion in funding to prevent it from exhausting its cash reserves by year-end.

The injection builds upon an existing £3 billion emergency facility and has provided sufficient capital to maintain operations through to autumn 2027.

Combined with its latest disclosure regarding debt repayment schedules, this has extended the timeframe needed for Thames Water to secure a rescue agreement.

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.”

Should the plans be implemented, they “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 hold approximately £17 billion of Thames Water’s debt pile of over £20 billion, are in ongoing talks with regulator Ofwat and the Government over a £10 billion deal aimed at preventing the supplier from being nationalised.

The rescue bid from the consortium, known as London & Valley Water, is widely regarded as the last viable option to prevent Thames Water from being placed into a special administration regime, following the collapse of a previous rescue deal with US private equity giant KKR in May last year.

London & Valley Water (L&VW) were sent back to the drawing board after former environment secretary Emma Reynolds warned in June that she did not consider their £10 billion proposal for Thames Water to go far enough in safeguarding customers or the environment.

The consortium is now working on revised proposals, which are expected to be submitted to Ofwat before the close of the year. However, calls for Thames Water to be returned to public ownership have been growing, with the Environment, Food and Rural Affairs (Efra) Committee stating in September that London and Valley Water’s takeover proposals should be abandoned, arguing they do not have “the interests of the public, the company or the environment at heart”.

Thames Water confirmed on Monday that negotiations 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”.

It stated: “The Company remains focused on securing a market-led solution which delivers long-term financial resilience and improvements for customers and the environment as soon as practicable.”