Creditors Vote on £2.4bn Emergency Loan for Thames Water

Creditors to Thames Water are due to vote on Thursday on whether to grant the company an emergency £2.4bn loan. The consortium, called London & Valley Water, is deciding whether to lift the funding facility for the debt-laden utility to £5.4bn so that it can keep operating until autumn 2027.

The company's class A creditors include BlackRock, Elliott Management and Silver Point Capital. Last year they granted a £3bn loan at an interest rate of 9.75%. Thames Water says it has drawn £2.65bn of that facility so far. The creditors have approved 15 earlier consent requests from the company.

This month Thames Water said it needed the extra £2.4bn. It expects to be unable to agree a longer-term deal on its debt before the money runs out, which it puts at the end of 2026 or the start of 2027.

Who pays for the loan

The campaign group We Own It analysed the proposal. If the loan carried the same terms and were added to bills, it said, interest alone would cost each household £40. Counting the whole sum, the figure would be £454 per household.

London & Valley Water insists no customer bills will be used to pay for the rescue financing. A spokesperson said the costs fall entirely on the class A creditors. A Thames Water spokesperson said bills are set by Ofwat and the funding adds no costs for households.

Sophie Conquest, lead campaigner at We Own It, said £11.9bn has been extracted from Thames Water since privatisation. She called for the government to let the company go into special administration, followed by permanent public ownership.

Charlie Maynard, the Liberal Democrat MP for Witney, said the creditors will likely hand over another overpriced rescue loan that customers end up paying for. In 2025 he took the company to court over the £3bn loan, together with campaigners and junior creditors, and lost.

A decision for Burnham

Andy Burnham is weighing whether to allow a takeover by the creditors. That deal would write off fines and cut environmental commitments. He is also considering nationalisation or another form of state control. Some Labour politicians and environmental campaigners want special administration.

One option under consideration is to convert about £100m of outstanding fines into a government stake in the company. Creditors would save money and ministers would gain a say in how it is run.

Thames Water serves 16 million customers in London and the Thames Valley. Its debt pile is now about £20bn. Shareholders walked away in 2024, leaving the creditors in effective control. Prof Dieter Helm of the University of Oxford said further loans only postpone what he called an inevitable special administration.

Source: The Guardian