Key facts
- Thames Water creditors are prepared to bid for the company even if it is placed under a Special Administration Regime (SAR).
- The creditor group holds approximately £14 billion in senior debt and has proposed a £10 billion rescue plan.
- The proposal includes injecting £3.35 billion of new equity and £3.25 billion of fresh debt.
- Andy Burnham, the likely next prime minister, has indicated a preference for greater public control, potentially through nationalisation.
- Thames Water is struggling with £17.6 billion in debt and could face insolvency by October.
Thames Water's creditors are prepared to pursue their bid for the company even if it is placed into temporary nationalisation, known as a special administration regime (SAR). The group of 100 institutional investors, collectively holding approximately £14 billion in senior debt, has been in discussions with the regulator Ofwat regarding their £10 billion rescue proposal.
This proposal aims to inject £3.35 billion of new equity and £3.25 billion of fresh debt into the struggling water company, which is buckling under £17.6 billion of debt accumulated since privatisation. The creditors view SAR as a procedural step rather than a definitive solution and believe they could buy Thames Water out of such a regime.
Andy Burnham, who is expected to become the next UK prime minister, has advocated for "greater public control" over Thames Water, which could involve nationalisation. The future of the company, serving 16 million customers, is a pressing issue, with potential insolvency looming by October.
Creditors, including major financial firms like Elliott Investment Management, Apollo Global Management, BlackRock, and M&G, are seeking to avoid a SAR, which they argue would require significant taxpayer funds and create uncertainty for employees and the supply chain. Other potential bidders, such as Hong Kong-based CK Infrastructure Holdings, have called for the company to enter SAR.
In a previous instance, the government recovered nearly the entire cost of temporarily nationalising the energy provider Bulb by selling it to Octopus for £3 billion. Under SAR, Thames Water would be managed by an independent insolvency expert to maintain services before a buyer is found, with debt and interest payments potentially frozen.