CMA reference deferral process
Thames Water Utilities Limited (“TWUL” or the “Company”) announced on 14 February 2025 that it had asked its economic regulator, Ofwat, to refer its Final Determination to the Competition and Markets Authority (CMA) for a re-determination (the “Reference”).
TWUL and Ofwat have now agreed that Ofwat will defer making the Reference for a period of up to 18 weeks from 18 March 2025.
This deferral is not a withdrawal of the request for the Reference and TWUL remains of the view that the Final Determination does not serve the interests of Thames Water’s customers, communities and the environment.
However, TWUL has concluded that recent discussions hold out the prospect of unlocking a market led solution for the recapitalisation of the Company, including through an equity raise, without the need for a CMA reference.
Sir Adrian Montague, Chairman Thames Water said: “We appreciate Ofwat’s time and constructive approach to our recent discussions and look forward to working with Ofwat and our other stakeholders over the next few months to achieve our shared goal of a sustainable recapitalisation of the Company, so that it may better serve its customers and stakeholders for decades to come.”
Equity raise process
Following our announcement on 11 February 2025, we are providing a further update on our equity raise process.
TWUL received proposals from six parties in respect of the equity raise process launched by the Company in the summer of 2024, and has since been conducting a detailed assessment of each proposal. The Company continues to target having agreed transaction terms in the second quarter of 2025, with a view to completing a recapitalisation in the third quarter of 2025.
The proposals involve a range of potential valuations, structures and outcomes for stakeholders. Of the five proposals that provided financial metrics, all except one (from a Class B Creditor and with significant conditions attached) indicated a material impairment of the Class A debt. The sixth proposal was for minority equity, intended to partner with investors, and did not set out financial metrics.
In certain of the contemplated proposals, relevant creditors would receive – in exchange for debt impairment – certain rights to share in future growth in the value of the Company, and/or will have the ability to co-invest in the business.
Most proposals are conditional on further, and varying, regulatory support and accommodations being achieved which the Company intends to progress in the coming months as part of its efforts to achieve a sustainable recapitalisation.
Discussions with relevant parties are ongoing, although there is no certainty that a binding equity proposal will be forthcoming or that any such proposals will be capable of being implemented. As a result, certain senior creditors continue to progress in parallel alternative transaction structures to seek to recapitalise the business.
