Thames Water’s senior creditors, including hedge fund Elliott Management and Apollo Global Management, have submitted a revised rescue plan to the UK’s water regulator, offering £6.55bn in new debt and £3.35bn in equity to formalize control of the struggling utility. The proposal, pending approval from Ofwat, would also restrict major creditors from selling significant stakes during the five-year AMP8 funding period (2025–2030).

The offer includes a £30% writedown on Class A debt, full write-off of Class B debt, and equity held by existing shareholders. Creditors aim to address Ofwat’s concerns about Thames Water’s access to low-cost debt markets, critical for funding infrastructure upgrades. The plan would inject £3.25bn immediately upon takeover, rising from a prior £2.25bn proposal, with additional tranches available over the funding period.

Regulatory and government approval remains a hurdle, with Thames Water describing the process as “complex” and estimating months to finalize terms. Negotiations also hinge on operational performance targets and resolving environmental fines, which creditors argue divert funds from infrastructure improvements. If ratified, the deal would require court approval in 2024.

This follows a £3bn emergency financing package secured last year to avert nationalization under the UK’s special administration regime. The revised terms reflect heightened sector-wide concerns after financial insurer Assured Guaranty halted water utility backing over a year ago. The proposal underscores the fragility of Thames Water’s financial position amid aging infrastructure and regulatory pressures.