Bidders demand Thames Water granted immunity over environmental crimes
Lenders vying to take over Thames Water have demanded that the struggling company and its management be granted immunity from prosecution for serious environmental crimes as a condition of acquiring it, the Guardian can reveal.
Creditors want the environment secretary, Steve Reed, to grant the water company extraordinary clemency from a series of strict rules covering everything from sewage spills to failure to upgrade its water treatment works.
The demands, if successful, would render the Environment Agency (EA) largely powerless to take enforcement action against Britain's biggest water company for some of the most serious criminal breaches of its licences and permits.
Thames Water has been a serial offender in recent years, paying tens of millions of pounds in fines and penalties, with multiple convictions for dumping raw sewage into rivers and streams and dozens more investigations under way.
The fate of the heavily indebted utility was thrown into further doubt this week when the US private equity firm KKR quit an auction to buy it, citing concerns about politicisation and the poor state of its assets.
That has left a disparate band of about 100 bondholders, who have collectively lent the company about £13bn, as the sole bidder. If the creditors' bid fails, Thames Water is likely to fall into state ownership via the special administration regime – a fate the Treasury is desperate to avoid.
Sources described the creditors' list of demands as a 'ransom note' that underlined their powerful negotiating position as the 'last show in town'.
Creditors argue that failure to secure leniency from fines and enforcement will mean Thames Water is caught in a 'doom loop' that prevents it from recovering and injecting enough money into its tired network. The company, which has 16 million customers in the London and Thames Valley regions and 8,000 employees, is labouring under about £20bn of debt and is running out of cash.
The requests formed part of the creditors' turnaround plan that was put to the water regulator, Ofwat, in recent days. Among the proposals were that the EA stops enforcing personal liability for managers at Thames Water and does not pursue enforcement over the company's failure to deliver a huge number of infrastructure upgrades, known as the water industry national environment programme (Winep).
The Guardian revealed in December that Thames Water intentionally diverted millions of pounds pledged for Winep environmental clean-ups towards bonuses and dividends, sparking an Ofwat investigation. Customers have already paid for those projects via their bills. Thames Water failed to deliver more than 100 of 812 Winep schemes it was due to between 2020 and 2025.
Other creditor requests include not prosecuting Thames Water for sewage spills on dry days or for 'flow to full treatment' licence breaches – where the EA and Ofwat police how much wastewater its plants can treat at any time.
They also want Thames Water to be exempt from prosecution for breaches of the industrial emissions directive, which governs pollution into rivers, streams, land and the atmosphere.
To achieve these requests, the creditors want Reed to give a strategic decision statement ordering the EA to deprioritise enforcement.
The Guardian revealed in March that Thames Water was demanding leniency for fines and penalties in order to attract bidders and stop cash they might inject from leaking out of the business.
However, the extent of the creditor demands, and request for near-blanket immunity for serious environmental crimes, has surprised water industry insiders, who warned it could spark legal challenges from rivals or lead to more requests for special treatment.
Last month Ofwat fined the company£123m over sewage and dividend breaches. The regulator said its investigation had uncovered failings around Thames's handling of sewage and wastewater, which amounted to a 'significant breach' of its legal obligations.
The EA is still pursuing parallel investigations into Thames Water over alleged failure to comply with environmental permits, and has powers to prosecute the company.
Creditors are expected to write down a significant proportion of their debt in return for taking over the company. Time is running out to find a solution to keep it afloat as it burns through £3bn of high-interest rescue loans.
A spokesperson for the creditors declined to comment on commercial discussions but confirmed their plan required 'regulatory support'.
'The creditors' proposal will fix the fundamentals, protect public health and prioritise improved customer and environmental outcomes,' they said. 'In addition to a detailed operational plan and billions in fresh investment proposed by the creditors, Thames Water requires a fundamental reset and regulatory support so that asset health and performance can be restored to the levels that customers and the environment deserve.
'The creditors are committed to working with the government and regulators to achieve that outcome as quickly as possible and expect Thames Water to be held to account to deliver a realistic but ambitious trajectory for the company's return to compliance.'
A government spokesperson said: 'The company is stable and government is carefully monitoring the situation. We expect the company to continue to meet its obligations to both customers and the environment.'
An Ofwat spokesperson said: 'Our focus is on ensuring that the company takes the right steps to deliver a turnaround in its operational performance and strengthen its financial resilience to the benefit of customers. We are assessing whether the [creditors'] plans are realistic, deliverable and will bring substantial benefits for customers and the environment.'
Thames Water said: 'In order to be investable, we and prospective investors would need to engage in discussions with our regulators.'
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Thames Water Creditors Deliver £17 Billion Recapitalisation Proposal to Transform Customer and Environmental Outcomes
LONDON, June 10, 2025--(BUSINESS WIRE)--Hanbury Strategy: - A large group of senior creditors (Creditors) of Thames Water Utilities Limited (Thames Water) have submitted to Ofwat a £17 billion plan designed to fix the fundamentals, turn around Thames Water, and improve performance for customers and the environment once and for all. - The proposal has been developed following an extensive due diligence process undertaken by Creditors and a significant team of industry specialists over several months. The Creditors' proposal, which remains subject to further negotiation and refinement, would see £3 billion of equity and over £2 billion of debt funding committed from day one post completion, a complete loss for existing shareholders, and several billion of debt write-downs to restore financial resilience and improve services for the benefit of customers, employees and the taxpayer. - The proposal would produce a balance sheet and credit metrics consistent with investment grade from day one post completion to establish a route to an investment grade credit rating as quickly as possible. - Customer bills are not expected to rise further under the Creditors' plan than under the Company's Final Determination for the five-year period to 31 March 2030. - Operational turnaround and enhanced governance are intended to reset the business and rebuild a new and resilient Thames Water that can deliver the high-quality service the public expects. The proposal seeks to deliver a transparent approach to corporate governance, in particular providing enhanced transparency to Ofwat and its nominated Independent Monitor for the duration of Thames Water's turnaround. - Creditors consider that their proposed new investment will deliver a strong foundation for the Company, laying the groundwork for a potential future public listing of Thames Water, and a focus on improving customer and environmental outcomes. The Creditors have submitted to Ofwat a detailed long-term "Transformation and Turnaround Plan" that is intended to fix the root causes of Thames Water's problems, rebuild customer trust and deliver improved environmental performance as quickly as possible whilst fixing the fundamentals of the business once and for all. Following an exhaustive and rigorous 12-month equity raise process, the Creditors' consider their plan to be the best route to recapitalising Thames Water and driving a turnaround that delivers significant and lasting benefits. The proposed recapitalisation of Thames Water is expected to represent the largest financial loss suffered by investors on an infrastructure asset in British history. Fixing the Fundamentals from Day One Under the proposal, new funding would be committed from day one, post completion, with a view to ensuring that Thames Water is sufficiently capitalised through the current price control period AMP8 (2025 – 2030) and beyond and able to deliver, amongst other things, the huge and complex investment program Thames Water requires to improve its infrastructure. To fix the Company's balance sheet and kick-start its transformation, the Creditors' plan is expected to: Deliver a £17 billion recapitalisation that puts Thames Water back on a sustainable financial footing to protect customers, employees and the taxpayer. Commit over £5 billion of new funding (comprised of £3 billion of equity and over £2 billion of debt financing) to help drive a new business plan which focuses on delivering customers' priorities and improving environmental outcomes. See several billion pounds written off across the capital structure including all of the existing equity and a material write-down to the Class A debt. Ensure significant deleveraging upon completion of the transaction to reduce gearing to below 60% and deliver a financially resilient capital structure which would be one of the lowest leverage levels in the sector. Produce a balance sheet and credit metrics consistent with investment grade from day one post completion to establish a route to an investment grade credit rating as quickly as possible Create a pathway to regain access to the debt capital markets, bringing down the cost of borrowing and enabling a return of Thames Water to the public markets with a public listing possible in the future. Based on the proposal submitted by the Creditors, all the benefits outlined above are expected to be delivered without increasing customer bills above those contemplated by Ofwat's Final Determination for the five-year period to 31 March 2030. Building an Operational Engine to Deliver for Customers and the Environment The Creditors' turnaround plan seeks to fix the fundamentals of the Company to improve underlying asset health, prioritising public health and safety risks and focusing on delivering what matters most for customers. It is expected to: Restore public trust with enhanced governance and leadership, and restore financial resilience, by re-establishing greater accountability and transparency alongside robust financial resilience with reduced leverage, robust liquidity and committed equity and debt. Rebuild a strong foundation to improve Thames Water's capital delivery capabilities and operational resilience, enabling Thames Water to deliver future capital investments at the best possible price for customers. Deliver a Transformation and Turnaround Plan led by an experienced executive management team with a proven track record in both the infrastructure sector and the implementation of complex turnarounds to lay the groundwork for a potential public listing of Thames Water at a suitable point in the future. Support economic growth, regional regeneration, and increased housing development through increased sewage and wastewater treatment capacity, accelerating the building of new strategic reservoirs, and the development of digital infrastructure required to power the future economy. The Creditors' plan is designed to allow £20.5 billion of strategically targeted operational expenditure over the next five years – mirroring Thames Water's allowance for AMP8. This expenditure is intended to reduce pollution events and leakage, enhance power, cyber security and climate change resilience, and deliver improved digital customer service. The operational transformation aims to deliver against customers' priorities and improve environmental performance through: A multi-AMP (10 – 15 year) programme of cleaning up rivers across London and the Thames Valley, including increased replacement and improvement of ageing assets and infrastructure. Enhanced investment in cleaning and sewer lining to drive down the rate of pollutions and flooding incidents. Increased investment in metering, mains replacement and leak detection to address broken pipes more efficiently and drive leakage reduction. Prioritisation of investment in waste treatment capacity to enable the delivery of new housing developments and support economic growth. Investment directed to focus on upgrades of high-risk sites where there is the highest customer and environmental impact, to de-risk critical asset issues and strengthen overall resilience. Significant investment in digital solutions to substantially improve customer service and satisfaction. Enhanced Governance and Accountability A new Board of Directors is expected to be established consistent with Ofwat's governance principles and the Wates Code. Mike McTighe has been appointed by the Creditors as a Senior Adviser. He has extensive experience in business transformation, complex turnarounds and regulated assets. McTighe is working closely with the Creditors to identify the mix of skills and experience necessary to oversee an improved governance structure that drives an effective turnaround of the Company. The new Board is expected to have the requisite experience and expertise needed to help transform the business, with experience spanning UK regulated water, delivery of large capital projects, business transformation, capital markets, economic regulation, and public policy. A Supportive Regulatory Environment to Reset the Business and Launch the Turnaround Alongside an anticipated investment of billions of pounds in new committed capital, the Creditors consider that regulatory support is required for a transformation and turnaround of this scale and complexity to succeed, so that asset health and performance can be improved to the levels that customers and the environment deserve. The regulatory support requested has been calibrated based on the extensive due diligence exercise undertaken to reflect the Creditors' views of what Thames Water can actually deliver with its current asset base. It includes the Creditors' proposals for ambitious, but realistic, targets to be set based on achievable compliance and what Thames Water is currently able to physically deliver. The proposal includes a request for: Totex reprioritisation to allow a focus on fixing the core business fundamentals, allowing investment to be reprioritised and re-phased to enable Creditors to focus on fixing the core fundamentals, customer priorities, and delivering tangible improvement in environmental performance as quickly as possible. Re-basing incentives and performance targets to allow an ambitious compliance trajectory. An enhanced aggregate sharing mechanism with an appropriate risk-return balance to reduce the inherent risks that Creditors anticipate Thames Water will face during a highly uncertain turnaround period and with the vast majority of any outperformance under that mechanism returned to customers. Full transparency and alignment between owners, the public, and regulators. A pragmatic approach to historic and future legal and regulatory compliance while Thames Water is undergoing its turnaround, reflecting realistic levels of compliance that the Company can achieve now and during delivery of the turnaround. A clean slate that would see Thames Water and investors held to account to deliver an ambitious trajectory for the Company's return to compliance. The Creditors' proposal is intended to deliver a fundamental reset of Thames Water, allowing the Company to move forward from past failures, make it possible to chart a clear path to success, and rebuild a stronger culture within the Company based on high performance and customers' priorities. The proposal is designed to rebuild public trust and ensure that the Company can deliver the extensive programme of work ahead as efficiently as possible for its customers. To mitigate against the risk of moral hazard, the proposed regulatory reset is intended to be a tailored package of support and commitments that would only be available to a water company that is in turnaround and the subject of a fundamental financial restructuring in which equity has been, or will be, materially impaired. Without the regulatory support requested, the Creditors believe that customers will remain exposed to the risk of a continued "doom loop" of underperformance and non-compliance, and Thames Water's rate of pollutions, asset health deterioration, and customer service levels are likely to worsen. A Spokesman for the Creditors said: "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. "The plan seeks to break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible timeframe. "The Creditors include some of the largest investors in UK water companies, as well as UK and global infrastructure more broadly, with a proven track record of corporate turnarounds and long-term stewardship. "These investors have the funding and experience required to deliver a transformation of the Company's performance which is intended to mark a departure from past failings, creating a 'new' Thames Water that works effectively alongside Government, regulators, and customers to deliver for the environment and economic growth." -ENDS Notes to Editors: About the Creditor Group The Creditors are a large and representative sub-group of a wider Creditor Group that holds over £13bn Class A and super senior debt and is made up of more than 100 financial institutions. The Creditors restricted themselves from trading in the Company's debt to conduct detailed due diligence and build the Creditor's proposal. As committed lenders to Thames Water, the Creditors have a strong economic interest in driving and delivering a successful, market-led solution that delivers stability to the wider sector, avoiding the risk of a highly value-destructive SAR, which was not designed for, nor well suited to, a company in need of a significant operational turnaround. The Creditors also hold substantial debt holdings in other regulated UK water companies and in the broader UK and global infrastructure sectors, representing a significant proportion of the debt capital markets in the sector. Stabilising Thames Water is expected to boost confidence of debt capital markets and international investors participating in the sector. New Investors to Provide the Stewardship and Expertise Required The Creditors that have developed the Transformation and Turnaround Plan are made up of pension and insurance funds, asset managers, and investment funds with a strong track record of helping complex businesses grow through committed capital and long-term stewardship. These investors have extensive experience in successfully delivering financial recapitalisations and operational turnarounds for companies facing financial distress, restructurings, and insolvency. Deep-dive meetings with Ofwat have begun with the Creditors aiming to have a transaction and the terms of their proposal agreed upon in early July, with the implementation process expected to begin immediately thereafter. View source version on Contacts Niamh Fogarty, Hanbury +44 07946 813843
Business Wire
2 days ago
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Thames Water Creditors Deliver £17 Billion Recapitalisation Proposal to Transform Customer and Environmental Outcomes
LONDON--(BUSINESS WIRE)--Hanbury Strategy: - A large group of senior creditors (Creditors) of Thames Water Utilities Limited (Thames Water) have submitted to Ofwat a £17 billion plan designed to fix the fundamentals, turn around Thames Water, and improve performance for customers and the environment once and for all. - The proposal has been developed following an extensive due diligence process undertaken by Creditors and a significant team of industry specialists over several months. The Creditors' proposal, which remains subject to further negotiation and refinement, would see £3 billion of equity and over £2 billion of debt funding committed from day one post completion, a complete loss for existing shareholders, and several billion of debt write-downs to restore financial resilience and improve services for the benefit of customers, employees and the taxpayer. - The proposal would produce a balance sheet and credit metrics consistent with investment grade from day one post completion to establish a route to an investment grade credit rating as quickly as possible. - Customer bills are not expected to rise further under the Creditors' plan than under the Company's Final Determination for the five-year period to 31 March 2030. - Operational turnaround and enhanced governance are intended to reset the business and rebuild a new and resilient Thames Water that can deliver the high-quality service the public expects. The proposal seeks to deliver a transparent approach to corporate governance, in particular providing enhanced transparency to Ofwat and its nominated Independent Monitor for the duration of Thames Water's turnaround. - Creditors consider that their proposed new investment will deliver a strong foundation for the Company, laying the groundwork for a potential future public listing of Thames Water, and a focus on improving customer and environmental outcomes. The Creditors have submitted to Ofwat a detailed long-term 'Transformation and Turnaround Plan' that is intended to fix the root causes of Thames Water's problems, rebuild customer trust and deliver improved environmental performance as quickly as possible whilst fixing the fundamentals of the business once and for all. Following an exhaustive and rigorous 12-month equity raise process, the Creditors' consider their plan to be the best route to recapitalising Thames Water and driving a turnaround that delivers significant and lasting benefits. The proposed recapitalisation of Thames Water is expected to represent the largest financial loss suffered by investors on an infrastructure asset in British history. Fixing the Fundamentals from Day One Under the proposal, new funding would be committed from day one, post completion, with a view to ensuring that Thames Water is sufficiently capitalised through the current price control period AMP8 (2025 – 2030) and beyond and able to deliver, amongst other things, the huge and complex investment program Thames Water requires to improve its infrastructure. To fix the Company's balance sheet and kick-start its transformation, the Creditors' plan is expected to: Deliver a £17 billion recapitalisation that puts Thames Water back on a sustainable financial footing to protect customers, employees and the taxpayer. Commit over £5 billion of new funding (comprised of £3 billion of equity and over £2 billion of debt financing) to help drive a new business plan which focuses on delivering customers' priorities and improving environmental outcomes. See several billion pounds written off across the capital structure including all of the existing equity and a material write-down to the Class A debt. Ensure significant deleveraging upon completion of the transaction to reduce gearing to below 60% and deliver a financially resilient capital structure which would be one of the lowest leverage levels in the sector. Produce a balance sheet and credit metrics consistent with investment grade from day one post completion to establish a route to an investment grade credit rating as quickly as possible Create a pathway to regain access to the debt capital markets, bringing down the cost of borrowing and enabling a return of Thames Water to the public markets with a public listing possible in the future. Based on the proposal submitted by the Creditors, all the benefits outlined above are expected to be delivered without increasing customer bills above those contemplated by Ofwat's Final Determination for the five-year period to 31 March 2030. Building an Operational Engine to Deliver for Customers and the Environment The Creditors' turnaround plan seeks to fix the fundamentals of the Company to improve underlying asset health, prioritising public health and safety risks and focusing on delivering what matters most for customers. It is expected to: Restore public trust with enhanced governance and leadership, and restore financial resilience, by re-establishing greater accountability and transparency alongside robust financial resilience with reduced leverage, robust liquidity and committed equity and debt. Rebuild a strong foundation to improve Thames Water's capital delivery capabilities and operational resilience, enabling Thames Water to deliver future capital investments at the best possible price for customers. Deliver a Transformation and Turnaround Plan led by an experienced executive management team with a proven track record in both the infrastructure sector and the implementation of complex turnarounds to lay the groundwork for a potential public listing of Thames Water at a suitable point in the future. Support economic growth, regional regeneration, and increased housing development through increased sewage and wastewater treatment capacity, accelerating the building of new strategic reservoirs, and the development of digital infrastructure required to power the future economy. The Creditors' plan is designed to allow £20.5 billion of strategically targeted operational expenditure over the next five years – mirroring Thames Water's allowance for AMP8. This expenditure is intended to reduce pollution events and leakage, enhance power, cyber security and climate change resilience, and deliver improved digital customer service. The operational transformation aims to deliver against customers' priorities and improve environmental performance through: A multi-AMP (10 – 15 year) programme of cleaning up rivers across London and the Thames Valley, including increased replacement and improvement of ageing assets and infrastructure. Enhanced investment in cleaning and sewer lining to drive down the rate of pollutions and flooding incidents. Increased investment in metering, mains replacement and leak detection to address broken pipes more efficiently and drive leakage reduction. Prioritisation of investment in waste treatment capacity to enable the delivery of new housing developments and support economic growth. Investment directed to focus on upgrades of high-risk sites where there is the highest customer and environmental impact, to de-risk critical asset issues and strengthen overall resilience. Significant investment in digital solutions to substantially improve customer service and satisfaction. Enhanced Governance and Accountability A new Board of Directors is expected to be established consistent with Ofwat's governance principles and the Wates Code. Mike McTighe has been appointed by the Creditors as a Senior Adviser. He has extensive experience in business transformation, complex turnarounds and regulated assets. McTighe is working closely with the Creditors to identify the mix of skills and experience necessary to oversee an improved governance structure that drives an effective turnaround of the Company. The new Board is expected to have the requisite experience and expertise needed to help transform the business, with experience spanning UK regulated water, delivery of large capital projects, business transformation, capital markets, economic regulation, and public policy. A Supportive Regulatory Environment to Reset the Business and Launch the Turnaround Alongside an anticipated investment of billions of pounds in new committed capital, the Creditors consider that regulatory support is required for a transformation and turnaround of this scale and complexity to succeed, so that asset health and performance can be improved to the levels that customers and the environment deserve. The regulatory support requested has been calibrated based on the extensive due diligence exercise undertaken to reflect the Creditors' views of what Thames Water can actually deliver with its current asset base. It includes the Creditors' proposals for ambitious, but realistic, targets to be set based on achievable compliance and what Thames Water is currently able to physically deliver. The proposal includes a request for: Totex reprioritisation to allow a focus on fixing the core business fundamentals, allowing investment to be reprioritised and re-phased to enable Creditors to focus on fixing the core fundamentals, customer priorities, and delivering tangible improvement in environmental performance as quickly as possible. Re-basing incentives and performance targets to allow an ambitious compliance trajectory. An enhanced aggregate sharing mechanism with an appropriate risk-return balance to reduce the inherent risks that Creditors anticipate Thames Water will face during a highly uncertain turnaround period and with the vast majority of any outperformance under that mechanism returned to customers. Full transparency and alignment between owners, the public, and regulators. A pragmatic approach to historic and future legal and regulatory compliance while Thames Water is undergoing its turnaround, reflecting realistic levels of compliance that the Company can achieve now and during delivery of the turnaround. A clean slate that would see Thames Water and investors held to account to deliver an ambitious trajectory for the Company's return to compliance. The Creditors' proposal is intended to deliver a fundamental reset of Thames Water, allowing the Company to move forward from past failures, make it possible to chart a clear path to success, and rebuild a stronger culture within the Company based on high performance and customers' priorities. The proposal is designed to rebuild public trust and ensure that the Company can deliver the extensive programme of work ahead as efficiently as possible for its customers. To mitigate against the risk of moral hazard, the proposed regulatory reset is intended to be a tailored package of support and commitments that would only be available to a water company that is in turnaround and the subject of a fundamental financial restructuring in which equity has been, or will be, materially impaired. Without the regulatory support requested, the Creditors believe that customers will remain exposed to the risk of a continued 'doom loop' of underperformance and non-compliance, and Thames Water's rate of pollutions, asset health deterioration, and customer service levels are likely to worsen. A Spokesman for the Creditors said: '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. 'The plan seeks to break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible timeframe. 'The Creditors include some of the largest investors in UK water companies, as well as UK and global infrastructure more broadly, with a proven track record of corporate turnarounds and long-term stewardship. 'These investors have the funding and experience required to deliver a transformation of the Company's performance which is intended to mark a departure from past failings, creating a 'new' Thames Water that works effectively alongside Government, regulators, and customers to deliver for the environment and economic growth.' -ENDS Notes to Editors: About the Creditor Group The Creditors are a large and representative sub-group of a wider Creditor Group that holds over £13bn Class A and super senior debt and is made up of more than 100 financial institutions. The Creditors restricted themselves from trading in the Company's debt to conduct detailed due diligence and build the Creditor's proposal. As committed lenders to Thames Water, the Creditors have a strong economic interest in driving and delivering a successful, market-led solution that delivers stability to the wider sector, avoiding the risk of a highly value-destructive SAR, which was not designed for, nor well suited to, a company in need of a significant operational turnaround. The Creditors also hold substantial debt holdings in other regulated UK water companies and in the broader UK and global infrastructure sectors, representing a significant proportion of the debt capital markets in the sector. Stabilising Thames Water is expected to boost confidence of debt capital markets and international investors participating in the sector. New Investors to Provide the Stewardship and Expertise Required The Creditors that have developed the Transformation and Turnaround Plan are made up of pension and insurance funds, asset managers, and investment funds with a strong track record of helping complex businesses grow through committed capital and long-term stewardship. These investors have extensive experience in successfully delivering financial recapitalisations and operational turnarounds for companies facing financial distress, restructurings, and insolvency. Deep-dive meetings with Ofwat have begun with the Creditors aiming to have a transaction and the terms of their proposal agreed upon in early July, with the implementation process expected to begin immediately thereafter.
Epoch Times
2 days ago
- Epoch Times
Overhaul of Thames Water Comes Amid Privatisation, Foreign Ownership Scrutiny
A proposed financial overhaul of Thames Water by a group of its U.S. and UK creditors has emerged against the backdrop of a wider debate over foreign ownership and public accountability in the water sector. Major institutional investors including BlackRock, Aberdeen, and Elliott Management have put forward a plan to restructure Thames Water's £17 billion debt. It would involve injecting £3 billion in new equity and £2 billion in additional funding, as well as writing off several billion pounds of existing debt. 'The plan seeks to break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible timeframe,' a spokesperson for the creditors told The Epoch Times. However, the group asked for regulatory flexibility in return. They want Ofwat to take a 'pragmatic approach' by easing performance targets and compliance expectations. It comes in contrast to the recommendation by the According to Thames Water, 'constructive discussions' with many of its stakeholders are ongoing, while its board is expected to review the turnaround plan in the coming weeks. Related Stories 5/28/2025 6/3/2025 In response to the creditor's proposal, Ofwat confirmed it is conducting a thorough review. 'Our focus is on assessing whether the plans are realistic, deliverable, and will bring substantial benefits for customers and the environment,' an Ofwat spokesperson told The Epoch Times. The rescue plan by creditors comes after U.S. private equity giant KKR last week Foreign Ownership Since the Thatcher-era privatisation of water in 1989, all major regional suppliers in England and Wales have been privatised, promising increased investment and efficiency. However, in the last decade alone, water companies have awarded over £112 million in bonuses and incentives to shareholders. In response, the government enforced a ban on 'unfair bonuses' for six water companies that failed to meet environmental and customer service standards. This applies to Thames Water, Yorkshire Water, Anglian Water, Wessex Water, United Utilities, and Southern Water. A tanker pumps out excess sewage from the Lightlands Lane sewage pumping station in Cookham, Berkshire, England, on Jan. 10, 2024. Andrew Matthews/PA Wire Campaigners from We Own It, a public ownership advocacy group, Its largest shareholder is the Ontario Municipal Employees Retirement System (Canada), with a 32 percent stake. Other investors include the UK's Universities Superannuation Scheme (20 percent), China Investment Corporation, Abu Dhabi Investment Authority, and Hermes. Elsewhere, foreign capital dominates the landscape. Southern Water is majority-owned by Australian investment giant Macquarie, while Yorkshire Water is split among investors from Singapore, Hong Kong, Germany, and Australia. Only a handful of water companies remain publicly listed, such as Severn Trent, United Utilities, and South West Water (via the Pennon Group). In contrast, water companies in Scotland, Wales, and Northern Ireland remain publicly owned or operated as not-for-profits. Nationalisation Debate Amid growing financial distress and record fines levied by Ofwat, political pressure has intensified for Thames Water to be brought into public ownership. Liberal Democrat MP Charlie Maynard Labour MP Despite growing political momentum for public ownership, the government hasn't confirmed any nationalisation plans. The Water Bill failed to secure government backing in March, as environment minister Emma Hardy warned it could cost more than £200 billion to renationalise the water industry. Speaking at the House of Lords last year, Baroness Hayman of Ullock 'It would take years to unpick the current ownership model, during which time the sector's issues would only get worse. The government instead wants to tackle the situation as quickly as possible by improving the privatised regulated model,' she added. Speaking about official plans to nationalise the water industry, the Department for Environment, Food and Rural Affairs told The Epoch Times that 'it would be inappropriate' to comment on specific commercial cases. PA Media contributed to this report.
