Thames Water seeks £2.4 billion increase to facility as cash nears depletion
Key Facts
Thames Water’s creditor group votes on October 29 on consent requests that would expand the company’s financing facility by £2.4 billion, raising its cap from £3 billion to £5.4 billion. The company says its available liquidity may last until the end of 2026 or early 2027, while recapitalization is not expected to be completed before then. The proposed financing, if its conditions are met, would extend liquidity into autumn 2027 and allow the capital program to continue. The vote does not constitute approval of a committed loan; the expansion and any drawdown are conditional on creditor approvals and waivers of some existing borrowing conditions. The vote may close before the scheduled date if the required majority is reached.
Thames Water said it had drawn £2.65 billion of the £3 billion available under its existing facility as of October 15, leaving limited headroom before reaching its cap. The sixteenth consent requests aim to allow the company to draw £350 million from the new commitments. The company is also seeking an extension of a financing condition until November 30, 2026, which could allow it to draw an additional £350 million in November. This comes as the company estimates that the current facility will not cover its needs beyond the end of 2026 or early 2027. It said recapitalization would not be completed before then, making an extension of liquidity part of an interim funding path.
The company serves 16 million customers in London and the Thames Valley and has debt of about £20 billion, according to a report by The Guardian. Its senior creditor group, which includes BlackRock, Elliott Management and Silver Point Capital, provided it with a £3 billion loan in 2025 at an interest rate of 9.75%. The current financing arrangements stem from an interim restructuring plan approved by a court in February 2025, which allowed for up to £3 billion in super-priority financing. The plan included an initial £1.5 billion tranche and an additional £1.5 billion of capacity split across two tranches. It also extended the maturities of Class A and B debt by two years.
The need for liquidity has collided with a dispute over who will bear its cost. The We Own It group estimated that the proposed financing could cost each household £40 in interest alone, or £454 if the full loan amount were added to bills. Thames Water, by contrast, said Ofwat sets customer bills and that the financing does not add costs for households. The creditor group said Class A creditors would bear the financing costs. The company had said its shareholders withdrew in 2024, leaving it under the effective control of creditors, according to The Guardian. Environment Secretary Emma Reynolds said in June that she was not convinced the creditors’ proposal did enough to protect consumers’ interests.
The broader recapitalization remains unresolved, despite the company publishing proposed terms for a settlement of Class B debt on October 16. The terms include writing off the entire debt of nearly £1 billion in exchange for an ownership stake in the group after restructuring, giving those creditors a recovery of about 5.9%. The company said the recapitalization could be implemented through a second restructuring plan, backed by Class A creditors and super-priority creditors holding at least 66.66% of the relevant debt. But it stressed that a final agreement is not guaranteed and that its terms remain under discussion. The company’s board, Ofwat, regulators and relevant investment committees had also not decided whether to accept the London & Valley Water proposal or proceed with its implementation when it was announced on October 16.
The stability period’s timeline adds pressure to negotiations, as the current period ends in March 2027. Thames Water said its parent company intends to carry out another interim transaction to extend the maturities of some debt and the stability period. This comes before the target date for liquidity to extend into autumn 2027 if the proposed increase is implemented, tying continued financing to reaching subsequent arrangements. The company announced on October 14 that creditors had approved the fifteenth consent requests, the latest published result before the current vote. In August, the London & Valley Water consortium named proposed directors to oversee a ten-year turnaround plan if the rescue plan is approved.