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Thames Water’s largest group of creditors is to offer an additional £1bn-plus sweetener in a bid to persuade Ofwat and the government to pursue a rescue deal with them that would head off the nationalisation of Britain’s biggest water utility.
Sky News has learnt that the senior creditors, which account for roughly £13bn of Thames Water‘s top-ranking debt, will propose this month that they inject hundreds of millions of pounds of new equity and write off a substantial additional portion of their existing capital.
In total, the extra equity and debt haircut are understood to total roughly £1.25bn, although the precise split between them was unclear on Monday evening.
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The numbers were still subject to being finalised as part of a comprehensive plan to be submitted to Ofwat, according to people close to the process.
Thames Water has about 16 million customers and serves about a quarter of the UK population.
The creditor group, which includes funds such as Elliott Management and Silver Point Capital, is racing to secure backing for a deal that would avoid seeing their investments effectively wiped out in a special administration regime (SAR).
Sky News revealed last month that Steve Reed, the environment secretary, had authorised the appointment of FTI Consulting, a City restructuring firm, to advise on contingency planning for a SAR.
On Monday, The Times reported that Rachel Reeves, the chancellor, had reaffirmed the government’s desire to see a “market-based solution” to the crisis at Thames Water.
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