Plans for Thames Water’s rescue have been submitted to Ofwat amidst yet another week of controversy for the UK’s largest water company.
Following the news earlier this month that US private equity firm, KKR, was pulling out of plans to buy Thames Water, the water company’s senior creditors, including BlackRock, Aberdeen, Apollo, Elliott, Silver Point, and others holding around £13 billion of debt, have told Ofwat they will inject £5 billion, involving £3 billion in equity and £2 billion in new debt, but with £6.7 billion of existing borrowing written off.
It comes with the demand for Ofwat to grant a regulatory reset, amnesty on past fines, and future flexibility, all aimed at avoiding a downward spiral which might hinder recovery.
However, there are alternative options. Sky News has exclusively reported that owner of Northumbrian Water, Hong Kong based CK Infrastructure Holdings (CKI), has written to Thames Water’s chairman, demanding to re-join the water company’s financial rescue process.
CKI was one six interested investors who had engaged in due diligence and equity-raising discussions before KKR was selected as the preferred bidder at the end of March 2025.
Some junior bondholders with Class B bonds have expressed opposition to the senior creditor plan. They want a government-initiated Special Administration Regime (temporary nationalisation), which, in their opinion, might attract better long-term investment.
Less than two weeks ago Thames was served with a £123m fine following two Ofwat investigations, and as recently as yesterday the company hit the headlines over bonus payments of £18.5m for 21 senior members of the management team, despite the new rules regarding performance related pay.
