Finance
Thames Water bondholders demand leniency on pollution as a rescue condition
Published by Global Banking & Finance Review®
Posted on June 9, 2025
3 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 9, 2025
3 min readLast updated: January 23, 2026
Thames Water bondholders propose a £5bn rescue plan demanding leniency on pollution fines to prevent nationalisation.
By Sarah Young
LONDON (Reuters) -Thames Water's bondholders have offered to inject 5 billion pounds ($6.8 billion) in new equity and debt and write off some existing borrowing to rescue the utility, but in return they have demanded looser pollution targets and clemency on fines.
The senior creditors, who hold 13 billion pounds of the water company's debt, stepped into the breach after U.S. private equity firm KKR pulled out of a deal last week, leaving them in effect as the only option to avoid nationalisation.
They said their 17 billion pound plan would fix the root causes of problems at Britain's biggest water supplier, which is running out of cash, struggling with billions of pounds of debt and is continuing to spill sewage into rivers.
Following a recapitalisation, Thames could eventually be listed on the market, the creditor group said, but they warned that "tailored" regulatory support would be needed, with "a pragmatic approach" to historic and future compliance.
In practice, that means relief from breaches of sewage operation rules that could result in fines of 900 million pounds over the next five years, according to Thames Water's estimates.
The government has promised to clean up Britain's waterways, so giving Thames Water special treatment would be politically difficult.
But the alternative of temporary nationalisation could cost the state billions.
The government said the company was stable and it was carefully monitoring the situation.
"We expect the company to continue to meet its obligations to both customers and the environment," a spokesperson said.
A creditor spokesperson said: "The plan seeks to break from the patterns of the past by delivering customers' priorities and improved outcomes for the environment in the shortest possible time frame."
A Thames Water spokesperson said the company's board would consider the plan, adding that constructive discussions with its stakeholders continued.
The Class A creditors comprise pension and insurance funds and asset managers, including Aberdeen, Apollo Global Management, Assured Guaranty, BlackRock, Corebridge Financial, Elliott Investment Management, Invesco and M&G.
Under their plan, several billion pounds of debt would be written off, including a "material write-down" to the class A debt, and they would commit 3 billion pounds of equity and 2 billion pounds of new debt.
"The proposed recapitalisation of Thames Water is expected to represent the largest financial loss suffered by investors on an infrastructure asset in British history," they said.
The group is in talks with regulator Ofwat, with the aim of agreeing terms next month.
The plan is likely to face opposition from a group of junior creditors, who earlier this year contested a senior level lifeline in court.
(Reporting by Sarah Young and Paul Sandle; editing by David Evans)
Thames Water's bondholders have proposed injecting £5 billion in new equity and debt, along with writing off some existing borrowing to rescue the utility.
The government stated that Thames Water is stable and that they are carefully monitoring the situation, expecting the company to meet its obligations to customers and the environment.
The bondholders are asking for 'tailored' regulatory support, which includes relief from breaches of sewage operation rules that could result in significant fines.
The Class A creditors include pension and insurance funds, as well as asset managers such as Aberdeen, Apollo Global Management, and BlackRock.
The plan is likely to face opposition from junior creditors, who previously contested a senior level lifeline in court earlier this year.
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