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A group of Thames Water Utilities Ltd lenders have set out plans on how they would deliver £20.5 billion of investment to turn around the troubled supplier’s performance as they look to secure a rescue of the firm. 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. 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. 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, chair 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. ‘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 Group PLC, Elliott Management and BlackRock Inc 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. But they also asked for leniency on performance targets and compliance, warning that a ‘regulatory reset’ was needed for the utility, or its performance would likely worsen. The latest investment plans would see the group commit to spending £9.4 billion on sewage and water assets over the next five year, up 45% on current levels. Of this, £3.9 billion would be spent on upgrading the worst performing sewage treatment sites, £1.2 billion on helping deliver high-quality drinking water and £2.7 billion on stopping sewage spill incidents. Longer term proposals would see 1,000km of water mains replaced over the coming decade, with £545 million targeted to replace around 370km by 2030. Thames Water’s current management has previously said it would need over £24 billion of investment allowance for the next five years and to increase bills by more than Ofwat had agreed. The government appointed insolvency specialists FTI Consulting last month to step up contingency planning in case the supplier collapses. A possible rescue deal with New York-based private equity firm KKR & Co LP collapsed in May, but the government has stressed its preference is for a ‘market-based solution’ rather than a costly temporary nationalisation. By Holly Williams, PA Business Editor Press Association: Finance source: PA Copyright 2025 Alliance News Ltd. All Rights Reserved.
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