Thames Water takeover rescue deal ‘would cost £749m’

Bidding consortium London & Valley Water (L&VW) has put forward plans to inject £3.35b of new equity and up to £6.55b in new debt as it looks to secure backing for its deal.

However, it’s been reported in the Financial Times that the emergency deal would cost Thames Water £160m in fees to senior creditors, if agreed to.

What’s more, an extra £254m in “other costs” would be needed by the utility, comprising mostly of lawyer fees and bankers.

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Thames Water would also pay an estimated £285m in accrued interest owed to creditors on the day a deal was completed, according to the terms seen by the FT, on top of almost £50mn in fees owed to other creditors.

Thames Water’s spokesman said: “Thames Water remains focused on securing a recapitalisation to restore financial stability, continue its operational turnaround and deliver essential services for 16 million customers.

“We are already making significant progress in improving performance for customers and the environment, and the proposed deal is intended to support and accelerate that turnaround.”

The creditor group said that the £10bn of new capital it was providing would help improve services and clean up rivers.

A spokesman for L&VW said told the FT: “Thames Water’s restructuring fees and costs are paid for entirely by its creditors — not a penny will come from customer money.

“Under the turnaround plan, regulators will be given more control and oversight to hold Thames Water accountable for delivering a transformation.

“All fines will be paid, no dividends will be taken until the company is turned around and £9.4bn of debt is written off by investors.”

The creditor takeover would stave off the temporary nationalisation of Thames Water, if it is agreed to.

But time is running out to reach an agreement with Thames Water set to run out of money in October.

Industry body Ofwat must submit any deal to a three-month public consultation, and the deal will also have to be signed off by the High Court.

Creditors first went to Ofwat for approval in June 2025.

Thames Water has been left on the brink of collapse by its nearly £20b of debt.

A rescue bid by creditors is seen as the final realistic option on the table to avoid being placed into the Government’s special administration regime after a previous rescue deal with US private equity giant KKR collapsed in May.

Administrators have already been lined up to step in if needed.