A consortium of creditors has submitted an updated rescue proposal for Thames Water to Ofwat, pledging £20.5 billion of investment and operational spending over the next five years to stabilise the utility and improve performance.
The group, called London & Valley Water (L&VW), represents holders of more than 60% of Thames Water’s Class A debt and includes UK and international pension funds, insurers, asset managers and investment funds. It says the plan would recapitalise and overhaul the company without taxpayer support, while tackling what it described as “a cycle of underinvestment and poor performance.”
The latest proposal includes £5.4 billion of new capital, a £3.15 billion equity commitment, and significant debt write-offs, including a 25% reduction in Class A debt and full cancellation of Class B debt. If implemented, gearing would be reduced to 53%, which L&VW says would be the lowest in the sector.
The latest proposal includes £5.4 billion of new capital, a £3.15 billion equity commitment, and significant debt write-offs, including a 25% reduction in Class A debt and full cancellation of Class B debt
Mike McTighe, the proposed new chair of Thames Water under the plan, said: “There is a huge amount of work to be done to turn around Thames Water and deliver the improved service and environmental outcomes that customers and local communities deserve. From day one, we will inject billions in new investment, strengthen Thames Water’s balance sheet, transform the Company for thousands of hard-working frontline staff and begin the delivery of an operational turnaround that puts 16 million customers and the environment first.”
Environmental improvements are a central part of the plan, including an ambition to reduce pollution by 30% during the next regulatory period and more than £4 billion of spending targeted at cleaning up rivers and addressing high-pollution sites. The consortium has also pledged no dividend payments during the turnaround period and says a new, independent board of experienced directors would oversee governance and accountability.
McTighe added: “Together with committed and experienced new investors, the collective focus of the new Board under London & Valley Water’s plan will be on fixing the foundations, reducing pollution and rebuilding public trust so that by the end of this decade Thames Water can once again be a reliable, resilient, and responsible company.”
The plan is now under review by Ofwat and remains subject to regulatory approval and further discussions with stakeholders this autumn.
