Published by Global Banking & Finance Review®
Posted on June 17, 2025
3 min readLast updated: January 23, 2026
Thames Water's rescue plan faces opposition from environmentalists and junior creditors over financial and environmental concerns.
LONDON (Reuters) -Senior creditors bidding to control Britain's Thames Water are trying to convince regulator Ofwat that their plan is the only way to prevent a state rescue. But opponents have criticised it on both environmental and financial grounds.
WHAT IS THE PLAN?
Senior creditors, among them Aberdeen, Apollo Global Management and M&G and hedge funds Elliott and Silver Point Capital, have offered 5 billion pounds ($6.8 billion) of new equity and debt, plus a write-off of billions of pounds of existing debt.
In return, they want the regulator to agree a reset of the environmental and investment regime, to include leniency on fines over pollution incidents.
The group believes these steps will get Thames Water's credit rating back to investment-grade as quickly as possible, which is an Ofwat requirement.
WHAT DO CRITICS SAY?
Critics including environmental groups say such an easing of the rules would be a reward for failure, and argue that some of the investors stand to make big returns should regulation be relaxed.
WHAT DO THE CREDITORS SAY?
The creditors say that, without changes, Thames Water is stuck paying fines instead of investing in its assets.
"We're not in there to say, look, make it really easy on us. We're in there to say make it reasonable on us," a senior creditor involved in the plan told Reuters, speaking on condition of anonymity because talks are private.
DEBT WRITE-DOWN
Under the proposal, there would be a more-than 3 billion pound impairment of about 16 billion pounds of senior debt, with about 1 billion pounds of junior debt likely to be wiped out, according to a source close to the talks.
The senior creditor said demands that his group take a bigger hit and "suck it up" did not recognise the threat a collapse of Thames Water could pose in terms of higher borrowing costs for water assets spreading to other projects. That is a big risk for the government, which wants to upgrade Britain's creaking infrastructure.
Thames Water's senior debt is currently trading at around 70 pence in the pound. The creditor group has offered to take a haircut of around 20 pence in the pound, a source said - more than the hedge funds which bought in at a distressed level paid for their debt, and on paper offering them a hefty return.
"The senior creditors are seeking preferential treatment, including unfair immunity from environmental fines, in a process they have engineered to exclude all other stakeholders," said a source close to the Class B group of junior creditors.
($1 = 0.7360 pounds)
(Reporting by Sarah Young and Paul Sandle; Editing by Catherine Evans)
The senior creditors aim to convince the regulator Ofwat that their plan is the only way to prevent a state rescue for Thames Water.
Critics, including environmental groups, argue that easing the rules would reward failure and allow investors to profit from relaxed regulations.
The plan includes a more-than 3 billion pound impairment of about 16 billion pounds of senior debt, with approximately 1 billion pounds of junior debt likely to be wiped out.
The creditors argue that without changes, Thames Water would be stuck paying fines instead of investing in its assets, which is crucial for improving its credit rating.
Thames Water's senior debt is currently trading at around 70 pence in the pound, with the creditor group offering to take a haircut of around 20 pence in the pound.
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