Thames Water signs binding deal with Class B creditors on £1bn debt write-off

what happened

Thames Water Utilities Limited said it has entered into a legally binding support agreement with some Class A creditors and Class B creditors, including an ad hoc group of Class B debtholders. The company made the announcement through an RNS release from the London Stock Exchange, which was carried by TradingView.

According to the company, talks with the London & Valley Water consortium, Ofwat and other regulators are still going on, and neither the board nor the regulators have decided to take forward the consortium's proposal. Class B holders would have their roughly £1bn of debt fully written off and receive a recovery of about 5.9% in new equity, the right to take part in £150m of new equity, and 5.9% participation in additional debt or preferred equity tiers. The company intends to keep paying interest on its debt in cash.

Thames Water also acknowledged that it does not yet have enough certainty to finish the restructuring before the stable platform period ends in March 2027. Its parent, TWUHL, therefore plans an interim transaction to extend the maturities of some senior debt.

why it matters

The news matters for the debt market of UK utilities, since the country's largest water operator is moving toward a restructuring without a final decision yet. The Class B terms depend on Ofwat launching a public consultation on or before 30 December 2027. Investors will be watching whether the maturities of senior debt can be extended in time.

market impact

Thames Water bonds and UK utilities: the restructuring shapes credit risk assessments and refinancing terms for the sector

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