The creditors bidding to rescue Thames Water remain confident they will be able to present a revised takeover proposal to Andy Burnham’s government, despite preparing for the possibility ministers reject the deal, a source told City AM. People close to the London & Valley Water (L&VW) consortium said they expected
Saskia Koopman
Saturday 18 July 2026 11:08 am
The creditors bidding to rescue Thames Water remain confident they will be able to present a revised takeover proposal to Andy Burnham’s government, despite preparing for the possibility ministers reject the deal, a source told City AM.
People close to the London & Valley Water (L&VW) consortium said they expected to engage with the new government after Burnham appoints his cabinet and remained focused on securing a private-sector rescue.
City AM understands 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 also sought to play down suggestions that a legal battle with the government was imminent.
No legal action has been launched, City AM understands. Instead, people close to the consortium described contingency planning as a precaution while the incoming government decides whether to support a private restructuring or place Thames Water into public control.
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The consortium, which includes Apollo Global Management, Elliott Management, Farallon Capital Management and Silver Point Capital, holds roughly £17bn of Thames Water’s £21bn debt pile.
Rescue proposal remains on table
Under its latest proposal, the creditor group would inject £3.35bn of fresh equity alongside £6.25bn of new borrowing while writing off £9.6bn of existing debt.
Read more Exclusive: Reynolds never met Thames Water investors before rejecting rescue deal
People close to the consortium believe they have strengthened that proposal following Reynolds’ intervention and expect to discuss it with the new government rather than seeing it dismissed outright.
The investors also 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 L&VW had instructed litigation specialist Pallas Partners to prepare legal options should ministers reject the consortium’s bid in favour of special administration or nationalisation.
The latest developments follow City AM’s report that neither Thames Water nor the creditor group had yet held discussions with Burnham’s team as the incoming Prime Minister considers the company’s future.
The decision is becoming increasingly urgent, and 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.
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, place the company into temporary special administration or pursue longer-term public ownership.
Read more Thames Water in the dark as Burnham mulls embattled utility’s future
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