Thames Water’s senior creditors, including Elliott Investment Management, Silver Point Capital, and Farallon Capital Management, are preparing a revised rescue proposal to avoid UK government intervention. The group, operating under London & Valley Water, plans to submit a new offer as soon as next month after consultations with Ofwat and government officials. The revised deal is expected to include a 35% debt write-down, up from the previously proposed 30%, along with increased equity and an additional £200 million ($265 million) set aside to address performance penalties.

Britain’s largest water supplier has been effectively controlled by creditors since shareholders exited in 2024. Lawmakers have urged the government to block creditors from taking full control, while Prime Minister Andy Burnham has prioritized public control of essential services. The government is considering placing Thames Water into special administration, a form of government-supervised insolvency. The creditors’ latest proposal includes a golden share for the government and greater oversight, but faces scrutiny over whether it rewards investors for the utility’s failures.

Thames Water carries over £18 billion in debt and is developing a restructuring plan through 2027. The creditors’ previous £10 billion proposal was rejected in March for being insufficient. Under Ofwat’s performance-based penalty system, Thames could lose up to £800 million by decade’s end for missing targets on leaks and sewage spills. The new offer includes over £1 billion to address these issues, exceeding expected penalties, and will be placed in a ring-fenced fund rather than returned to customers. Creditors also plan to increase equity injection to £3.5 billion, up from £3.35 billion, with a nine-year turnaround plan and no dividends. The goal is to regain an investment-grade credit rating and eventually relist Thames on the stock market, avoiding special administration.