Thames Water set to be saved from bankruptcy as £1billion rescue package unveiled

The revised offer includes provisions to eliminate around one-third of the company's debt burden, which currently stands at close to £20billion.

The consortium submitted its enhanced proposal to water regulator Ofwat on Wednesday, describing the plan as more comprehensive than their initial submission in May.

The rescue package represents a significant increase from earlier proposals, with the consortium emphasising that the plan has been developed following consultations with Ofwat over the past three months.

The additional funding would address the utility's long-term financial stability while covering penalties for environmental and regulatory breaches.

The group has committed to retaining ownership until at least March 31 2030, despite outlining eventual plans for a stock market listing.

This pledge is intended to demonstrate their dedication to rehabilitating the troubled water company rather than pursuing a quick sale.

Thames Water faces the prospect of entering a special administration regime, a form of temporary nationalisation that would eliminate the value of creditors' investments.

The bondholders currently control the utility following a High Court-approved restructuring that provided up to £3billion in emergency funding to maintain operations through summer 2026.

Major financial institutions backing the proposal include Elliott Management and Apollo Global Management, both based in the United States, alongside British investment firms.

These creditors became the de facto owners of Thames Water through their bond holdings and are now seeking to protect their investments while addressing the company's financial difficulties.

Mike McTighe, the consortium's proposed chairman for Thames Water, acknowledged the substantial challenges ahead.

"There is a huge amount of work to be done to turn around Thames Water and deliver the improved service and environmental outcomes that customers and local communities deserve," he said.

Mr McTighe pledged immediate action, promising to "inject billions in new investment" while focusing on "fixing the foundations, reducing pollution and rebuilding public trust".

His vision includes making Thames Water "a reliable, resilient, and responsible company" by the end of the decade.

Thames Water chief executive Chris Weston welcomed the development, calling it "an important milestone" in securing a market-based recapitalisation.

The company provides services to roughly 25% of the UK population, primarily in London and southern England, and has a workforce of 8,000.

Thames Water has come under sustained criticism in recent years following repeated sewage discharges and pipe leaks.

In May, it was fined £122.7 million—the largest penalty ever imposed by the water regulator—for breaching rules on sewage spills and shareholder distributions.

On Thursday, London and Valley Water described its turnaround plan as the “fastest and most reliable route” to restore Thames Water, improve waterway conditions, and rebuild public trust.

Investors pledged an initial £5.4 billion to stabilise the company’s finances and fund future investment, but stressed that the funding was contingent on “stretching but achievable and realistic performance targets.”

They confirmed that no dividends would be paid during the turnaround period and committed not to sell the business before March 2030.

Outstanding fines would also be settled, according to the lenders.

This development comes after Reform UK leader Nigel Farage urged Labour to "let the water companies go bust" in response to calls for the Government to step in and bail out Thames Water.

He said: "They mustn't be bailed out. If you privatise something, people put money in and it's gone wrong, they deserve to lose their money."

Mr Farage also called for "fresh investment into the industry", and that customers will "have to accept that bills are going to go up, I don't see any way around that."