Group of lenders talking to regulators over rescue deal
Latest offer includes 3.35 billion pounds of equity investment
Talks continue over terms of recapitalisation
Adds detail throughout
LONDON, March 16 (Reuters) - A group of Thames Water's creditors have offered 3.35 billion pounds ($4.4 billion) of new equity and up to 6.55 billion pounds of new debt as part of their latest bid to rescue Britain's biggest water company.
Thames Water, which is at the centre of a sewage scandal in Britain, could be nationalised if regulators fail to agree a deal with the group of senior creditors, which includes Invesco, Elliott Management and Silver Point Capital.
Monday's proposal - part of the creditors' latest offer called London & Valley Water - increases the pledged investment compared to a 3.15 billion pound equity proposal made in October last year.
"The L&VW proposal is non-binding and remains subject to ongoing review by the company, Ofwat and other regulators, and subject to discussion with the company’s financial stakeholders," Thames Water said in a statement.
DEBT-CRIPPLED THAMES WATER STRUGGLING SINCE 2023
Thames Water, which serves 16 million customers, has been fending off financial collapse since 2023 as it grapples with nearly 20 billion pounds of debt in a sector where the regulator limits price increases.
The statement said the higher equity investment represented the capital required to deliver a turnaround of the company over the next four years. It said the group of lenders has also committed to paying no dividend during the turnaround process or until the company is listed and pledged not to sell Thames Water before 2030.
The proposal would also see the recapitalisation of Thames Water's balance sheet through a 30% write-off of Class A debt and a full write-off of lower ranked debt, helping reduce the company's leverage and return it to an investment-grade credit rating.
"Discussions with financial stakeholders in relation to the terms of the recapitalisation are expected to take place in the coming weeks," the statement added.
The talks with the regulator also cover the payment of fines Thames Water could face over sewage pollution and what performance targets it would need to meet during the turnaround period, the statement said.
Without an agreement between the regulators and the creditors, Thames Water is likely to end up in the government's special administration regime, a form of temporary nationalisation.
($1 = 0.7552 pounds)
(Reporting by Sarah Young in London, Prerna Bedi in Bengaluru; Editing by Sumana Nandy and Joe Bavier)
((Prerna.Bedi@thomsonreuters.com; +91 98052 24616;))
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