Thames Water has confirmed that a consortium called London & Valley Water (L&VW) has submitted a revised proposal to recapitalise and turn around the struggling UK water utility, though no final decision has yet been made by any of the parties involved.
The proposal, which has been under discussion since June 2025 alongside regulator Ofwat and other authorities, would see Thames Water receive £3.35 billion in new equity and up to £6.55 billion in new debt. The funds would be used to finance an ambitious Performance Improvement and Turnaround Plan (PITP) covering the full AMP8 regulatory period from 2025 to 2030, with a total expenditure of £20.4 billion planned for infrastructure investment, asset maintenance, and environmental compliance.
Thames Water stressed that the proposal remains non-binding and subject to ongoing review, with no guarantee it will be accepted or finalised in its current form.
Under the terms outlined, customer bills during AMP8 would remain broadly in line with those set out in the company's Final Determination. L&VW has also committed to an excess value share mechanism, meaning customers would benefit from a share of any future proceeds if the business is eventually sold above agreed levels. All outstanding fines would be paid upfront by L&VW, without passing costs on to customers.
On the financial restructuring side, the plan involves writing off 30% of the company's Class A debt and wiping out Class B debt and subordinated obligations entirely. Day-one net leverage is expected to sit at 52%, which would be among the lowest in the sector, with the aim of restoring an investment-grade credit rating over time. No dividends would be paid before April 2035, ensuring cash is reinvested into the business throughout the turnaround period.
A Thames Water Community Benefit Trust would also be established, initially funded with £25 million by L&VW to support local environmental and community projects.
Discussions with financial stakeholders on the terms of the recapitalisation are expected to continue in the coming weeks.
