Thames Water creditors bidding to rescue the troubled utility remain confident they can present a revised takeover proposal to Andy Burnham’s new government, a source has told City AM.
People close to the London and Valley Water consortium said they expected to engage with the incoming administration once Burnham appoints his cabinet and remained focused on securing a private-sector rescue.
The consortium has continued developing its proposals since environment secretary Emma Reynolds criticised the original restructuring plan and believes it has further measures to discuss with incoming ministers.
The source sought to play down suggestions that a legal battle with the government was imminent, with no legal action having been launched, City AM understands.
People close to the consortium described contingency planning as a precaution while the new government decides whether to support a private restructuring or place Thames Water into public control.
The consortium includes Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital, and collectively holds roughly 17 billion pounds of Thames Water’s 21 billion pound debt pile.
Under the latest proposal, the creditor group would inject 3.35 billion pounds of fresh equity alongside 6.25 billion pounds of new borrowing while writing off 9.6 billion pounds of existing debt.
The investors believe existing legal protections would require senior creditors to receive full compensation if Thames Water were ultimately taken into permanent public ownership.
Sky News reported that London and Valley Water had instructed litigation specialist Pallas Partners to prepare legal options should ministers reject the consortium’s bid in favour of special administration or nationalisation.
Thames Water said this week it expects to run out of cash before the end of the year without a long-term funding solution, although creditors have said they are prepared to continue financing the company into 2027.
The company’s latest proposal would leave creditors in control before returning Thames Water to private ownership through a stock market listing in around five years.
The consortium has also discussed offering shares to customers and delaying shareholder dividends until the 2030s, as part of efforts to broaden the appeal of a private-sector resolution.
Burnham has previously said Thames Water should be brought into public control but has yet to spell out whether he would back a creditor-led rescue, special administration, or longer-term public ownership.
The decision is becoming increasingly urgent as neither Thames Water nor the creditor group had yet held discussions with Burnham’s team, according to an earlier City AM report.