Thames Water creditors have set out how they would deliver the company's rescue plans with a £20.5bn investment.
The supplier’s main creditors – led by a team of 15 investors called the London & Valley Water consortium – have pledged to “fix the foundations” of Thames Water with the mammoth spending proposal put forward to regulator Ofwat.
They are promising an increased focus on improving Thames Water’s poor pollution performance and record on leaks, with targets to cut sewage spills by at least 135 a year.
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Thames Water – the UK’s biggest water supplier with around 16 million customers – is on the brink of nationalisation as it struggles under a mountain of debts.
The creditors are looking to secure backing for their plans to avoid Thames Water being put into a temporary special administration regime (SAR), which would effectively wipe out their investments.
Their spending proposals would see them work within the £20.5 billion investment allowance set by Ofwat in its final determination on Thames Water spending and bill rises.
Household bills would not rise by more than the regulator has already approved over the next five years, the group stressed.
But it said the plans would need “billions of pounds of new funding” from the consortium.
It remains in talks over a rescue deal of the supplier that would see them pump in new cash, but ask for leniency in how it is regulated.
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The creditors hope to put forward updated plans on a funding deal and debt overhaul for Thames Water within the next couple of weeks.
Mike McTighe, chairman designate of the London & Valley Water consortium, said: “Over the next 10 years the investment we will channel into Thames Water’s network will make it one of the biggest infrastructure projects in the country.
“Our core focus will be on improving performance for customers, maintaining the highest standards of drinking water, reducing pollution and overcoming the many other challenges Thames Water faces.
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“This turnaround has the opportunity to transform essential services for 16 million customers, clean up our waterways and rebuild public trust.”
The 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.
The firms involved – which include US and UK investment firms such as Aberdeen, Elliott Management and BlackRock – submitted an initial financial plan in June to overhaul £17 billion of Thames Water’s debts, including investing another £3 billion in new equity and a further £2 billion of funding.
