A group of senior creditors for Thames Water, who hold about $21.5 billion (£17 billion) of the utility's roughly $25 billion (£20 billion) debt, are working on an improved rescue deal. This revised plan could include a "golden share" for the government and an ambition for a London listing, in an effort to persuade the government to accept their bid and avoid state control. This comes as lawmakers, including Prime Minister Andy Burnham, have suggested nationalization or temporary public ownership as a solution for the struggling company, which serves 16 million customers across London and the Thames Valley.
This proposed revised deal follows a strong recommendation from the Environment, Food and Rural Affairs (EFRA) Committee, a cross-party group of lawmakers, for the government to reject the creditors' previous $12.5 billion (£10 billion) takeover proposal. The committee argued that the prior plan did not sufficiently protect the interests of the public, the company, or the environment, characterizing the creditors as "joyriding in the family car" and primarily seeking to "extract immediate value." They also warned that Thames Water, burdened by fines and underinvestment, is in a "doom loop" and could accrue over $1.1 billion (£900 million) in penalties over the next five years.
The EFRA Committee, chaired by Alistair Carmichael, called for the government to consider placing Thames Water into special administration, a form of temporary nationalization. Carmichael suggested that any short-term liabilities the government might incur during such a process could be recouped through a future sale once the utility's finances and performance stabilize. The committee also noted that existing laws need to be updated to allow for special administration based solely on performance grounds. The creditors, operating under the consortium name London & Valley Water, maintain they have never controlled the company nor received dividends, and their enhanced proposal aims to address feedback from regulators and ministers, asserting it as the quickest path to resolve Thames Water's complex issues.
Thames Water, which has been fighting for survival after years of underinvestment and faces public anger over its performance, requires significant recapitalization to achieve financial stability. A spokesperson for the company stated that turning it around will take a decade and substantial, sustained investment. They emphasized that any delay in recapitalization risks hindering the turnaround, disrupting investment, and increasing the cost of delivering necessary improvements for customers and the environment. Fears about the company's potential collapse first arose three years ago, and its creditors had previously been warned by former environment secretary Emma Reynolds that their earlier plans were insufficient to protect customers or the environment.
