Concern over £5bn rescue plan for Thames Water

Lenders to Thames Water have said they will provide £5bn in funding to the struggling firm, in an emergency turnaround plan that has quickly raised concerns from the water regulator, Ofwat.

- Jasper Jolly Anna Isaac

The group of existing senior creditors to Thames Water, a band of more than 100 financial institutions, said their plan would inject £3bn of equity and another £2.25bn of debt.

However, they said their plan would reduce total debt levels at Thames, which is struggling under about £20bn of debt. In total, lenders would write off about £6.7bn of their loans to Thames and its parent company in an effort to reduce the huge load and in preparation for an eventual stock market listing.

Creditors admitted their plan hinges on a considerable leniency from Ofwat, the government's water regulator for England and Wales, over future fines for environmental failings. The creditors have requested Ofwat sets Thames Water lower environmental standards - and even for it to let Thames off without fines for past breaches of its licences.