Thames Water has confirmed an improved rescue bid has been tabled by creditors for the troubled supplier but said talks are ongoing over the proposals.
Britain’s biggest water supplier, which has around 16 million customers, said bidding consortium London & Valley Water (L&VW) has put forward plans to inject £3.35 billion of new equity and up to £6.55 billion in new debt as it looks to secure backing for its deal.
The planned bid – which was first reported over the weekend – marks an increase from the offer lodged in October last year by the consortium of Thames Water’s main creditors, including institutional investors such as Aberdeen, Elliott Management and Silverpoint Capital.
Thames Water said the proposal “remains subject to ongoing review by the company, Ofwat and other regulators, and subject to discussion with the company’s financial stakeholders”.
It added: “As engagement remains ongoing, there is no certainty that the L&VW Proposal will be accepted or that it will be finalised in its current form.
“At this stage, the company’s board, Ofwat, other regulators and relevant investment committees have made no decision to accept and take forward the L&VW proposal to implementation.”
Thames Water is hoping to secure the deal to stave off temporary nationalisation after being left on the brink of collapse by nearly £20 billion of debt.
A rescue bid by creditors is seen as the final realistic option on the table to avoid being placed into the Government’s special administration regime after a previous rescue deal with US private equity giant KKR collapsed in May.
Administrators have already been lined up to step in if needed.
As well as an equity and debt injection, the bid proposal includes commitments from the creditors not to sell a significant proportion of their equity investment over the regulatory cycle through to 2030, and also prevents Thames Water from paying dividends to shareholders before April 2035.
It could only start to pay dividends before this date if it becomes a listed company, it said.
The revised offer would also see the creditors accept up to 30% of the company’s debt load being written off to help reduce the water firm’s vast debt mountain.
Its creditors are the bondholders who now effectively own Thames Water after the High Court approved a financial restructuring earlier this year through a loan of up to £3 billion to ensure it can keep running until the summer of 2026.
