A group of over 100 senior creditors to Thames Water has submitted a £17 billion recapitalisation plan aimed at rescuing the financially troubled utility, which supplies water and wastewater services to about 16 million people across London and the South East. The proposal, presented to Ofwat, seeks to restore financial stability, improve environmental performance, and overhaul corporate governance following years of underinvestment and mounting debt.
The proposed turnaround includes £3 billion in new equity and £2.25 billion in debt financing. It would also involve writing off around £6.7 billion of existing debt, including all current shareholder equity. If implemented, it would represent one of the largest financial losses to investors on a British infrastructure asset in history.
Creditors say the plan is designed to deliver a sustainable future for Thames Water without raising customer bills beyond levels already forecast under Ofwat’s current five-year price controls. They also envision a path to eventual public listing and a financial structure consistent with investment-grade ratings “from day one” after completion.
“The Creditors’ turnaround plan 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,” a spokesperson for the group said.
The proposal, presented to Ofwat, seeks to restore financial stability, improve environmental performance, and overhaul corporate governance following years of underinvestment and mounting debt
The creditors' “Transformation and Turnaround Plan” outlines £20.5 billion in targeted operational spending over five years, with a focus on reducing leakage and pollution, improving wastewater treatment capacity, and investing in digital services. It also calls for enhanced governance, including the appointment of a new board and closer oversight by regulators.
However, the proposal has raised concerns at Ofwat. According to The Guardian, officials at the regulator are reviewing the plan closely and have questioned whether the proposed level of debt relief—approximately 20%—is sufficient for Thames Water to regain an investment-grade credit rating. Some within Ofwat reportedly believe that a debt write-down of 30–40% may be necessary.
Ofwat has also expressed reservations about elements of the plan that request regulatory leniency. The creditors are seeking a temporary easing of environmental compliance targets and protection from fines for past breaches, arguing that such measures are essential to avoid what they describe as a “doom loop” of penalties and underperformance.
An Ofwat spokesperson said: “We have commenced a thorough review of the submission from the group of senior creditors. Our focus is on assessing whether the plans are realistic, deliverable and will bring substantial benefits for customers and the environment.”
The plan comes after the US private equity firm KKR withdrew from acquisition talks, leaving the utility’s long-term control likely to rest with its existing creditors, which include large institutional investors such as BlackRock, M&G, and Invesco, as well as hedge funds like Elliott Investment Management and Silver Point Capital.
The UK government has so far resisted calls to place Thames Water into special administration—effectively temporary nationalisation—saying it would intervene only if there were a direct threat to water or sewerage services.
