Creditors have tabled a restructuring proposal for Thames Water that would shift control of the utility to senior lenders and result in around £749 million of total costs if implemented, according to a creditor submission reported on Wednesday.
The proposed breakdown of the £749 million includes £160 million in fees payable to senior creditors, £254 million in other costs, roughly £285 million to settle accrued interest on completion, and a further £50 million in fees due to other creditors.
Under the terms described in the submission, lenders would provide fresh capital to the company. Creditors would inject £3.35 billion of new equity alongside £3.25 billion of new debt. The financing package would also include an option to raise an additional £3.3 billion of debt.
Part of the arrangement involves commitment fees of £160 million tied to lenders supporting a £6.55 billion credit facility. The submission states that Apollo would backstop the entire credit facility and could receive the £160 million payment, while other creditors would receive smaller portions of that sum.
The proposal would see Thames Water avoid some new penalties for a four-year period in return for £700 million of investor funding directed at improving the company's assets. As part of the creditor plan, a new management regime has been proposed with a pathway that could lead to an initial public offering in 2030.
Regulatory scrutiny remains in play. Ofwat has told the Financial Times that it is reviewing the proposals to determine whether they would be beneficial to customers and the environment.
Context and mechanics
The restructuring submission sets out both immediate cash costs and a broader financing structure. It identifies precise fee amounts and the mix of equity and debt that creditors would supply, as well as an option to expand indebtedness should that be required.
The plan links a temporary easing of penalty exposure to the provision of capital earmarked for asset improvement, and it contemplates a change in ownership and management with potential public-market re-entry in 2030.
Summary
Creditors propose taking control of Thames Water under a package that would impose about £749 million of direct costs on the company, supply billions of pounds of new equity and debt, include sizeable fees for lenders and an option for further borrowing, and offer a temporary reduction in penalties in exchange for funding to upgrade assets. Ofwat is reviewing the plan to judge its effects on customers and the environment.