Thames Water’s largest group of creditors to offer an additional GBP 1bn-plus sweetener in rescue deal - Sky News

Thames Water’s largest group of creditors to offer an additional GBP 1bn-plus sweetener in rescue deal - Sky News

Thames Water, the UK's largest water company serving 16 million customers, is inching closer to a rescue deal as its largest group of creditors has agreed to offer an additional GBP 1 billion sweetener. The move comes as the company continues to navigate its financial turmoil, with the government prepared for various contingency plans, including special administration [1].

Rachel Reeves, the Chancellor of the Exchequer, has been actively engaging with Thames Water creditors to find a market-based solution. She sent a letter in July to the Thames Water creditor group, which represents about 100 financial institutions, to discuss a rescue plan [1]. Reeves emphasized the need for a sustainable, market-based solution that secures the company's long-term financial stability and delivers positive outcomes for customers and the environment [1].

The additional GBP 1 billion sweetener is aimed at addressing the concerns of creditors and providing a more attractive offer for potential investors. Thames Water has been under the effective control of its senior creditors since shareholders walked away from the company last year [1]. The company has been on the verge of financial collapse due to decades of underinvestment and dividend extraction [1].

The government has been planning for all eventualities, including a special administration regime, which would involve temporary nationalization and the restructuring of Thames Water's £17.7 billion net debt [1]. However, the government is hopeful that a market-based solution can be found without resorting to such extreme measures.

The offer of an additional GBP 1 billion sweetener is a significant step towards resolving Thames Water's financial issues. It shows that the creditors are willing to work with the company to find a sustainable solution that benefits all stakeholders. The government's contingency planning and Reeves' commitment to a market-based solution indicate that they are serious about preventing Thames Water from collapsing and ensuring the continued provision of vital public services.

References:
[1] https://www.theguardian.com/business/2025/sep/01/rachel-reeves-thames-water-creditors