Thames Water’s senior creditors are nearing a deal with junior bondholders to avoid a legal challenge that could delay their takeover of the indebted utility. The agreement would grant lower-ranking bondholders a slice of equity and fees if the senior creditors’ plan succeeds, revising their restructuring approach after months of delays. Senior creditors, including Silver Point Capital and Elliott Management, have been supporting Thames Water with a £3bn loan at nearly 10% interest, which the company plans to increase to £5.4bn to maintain liquidity until autumn 2027.
Under the original plan, class A creditors would take a 30% debt writedown and class B debt would be fully written off. Now, junior bondholders may recover a single-digit percentage of their debt through equity and fees in a new restructuring. The creditor group, operating as London & Valley Water Consortium, holds about £17bn of Thames Water’s debt and aims for a stock market listing as early as 2030.
They have also proposed an £800mn one-off payment to Ofwat to waive certain penalties until March 2030, and may offer a £2.4bn bridging loan if Ofwat approval is delayed, contingent on government reassurance of a 'market solution'. Earlier, lenders offered a 'golden share' to the UK government to avert nationalisation under Prime Minister Andy Burnham. Thames Water has incurred nearly £2bn in financing and advisory fees over 18 months to September 2026.
Source: Financial Times Companies · Summarized by HeadlinesBriefing