Creditors of Thames Water have made a rescue offer for the failing company by allowing a £4bn write-off of their debt in return for changed targets on pollution incidents.
The deal would see 25 per cent of Thames Water’s debt written off but the group, under the consortium London & Valley Water, would see regulators change targets on pollution and sewage.
Lenders to Thames Water said its plan was the “fastest and most reliable route” to save the UK’s largest utility company in the UK, which has been under intense pressure for nearly two years.
Several investors including private equity giant KKR have withdrawn from takeover negotiations.
Creditors in the consortium include Apollo Global Management, BlackRock, Aberdeen and the hedge fund Elliott Management.
The group has pledged to invest an initial £5bn of new funds, with more than £3bn coming through new equity.
No dividends would be paid to shareholders and no sale would be made before March 2030.
Chancellor Rachel Reeves has said she prefers a “market-based” solution to the crisis at Thames Water over nationalisation.
Outstanding fines to regulators would also be paid. Ofwat, the water regulator which is set to be abolished by the government, said it would review the plans.
Creditors said that Thames Water infrastructure were exposed to “single points of failure”, with their plan now being the only one left available.
Thames Water creditors hope to gain full approval from the water company and state officials by the end of this month before new appeals for bill increases are made.
In the long term, the creditors group has plans to list the water company on the stock market.
Thames Water crisis reaches tipping point
The consortium has already loaned Thames Water billions of pounds at a high interest rate of 9.75 per cent.
It also revealed its rescue plans for a £20.5bn investment to handle sewage issues, replacing water mains and fixing the company’s finances.
The embattled water supplier is fighting to avoid total collapse amid rumours that Labour is already laying the groundwork for the firm to be put into a Special Administration Regime (SAR) for essential services.
The government has reportedly consulted FTI Consulting to provide advice on possible contingency plans if the company fell through.
Thames Water also received a historic £123m fine from the water regulator over rule breaches related to pollution and dividend payouts.