EMEA Special Situations: Thames Water creditors seek in-principle takeover agreement in coming weeks; RP2 could slide into H2 2026
Matt Dickinson: Senior Reporter - LevFin Insights
22 January 2026
Insights into EMEA Special Situations, including:
- Restructuring Timeline Extended: Discover how Thames Water RP2 is now expected to slide into H2 2026, delayed from the original Q3 2025 target, as creditors and Ofwat work through the UK’s most complex utility recapitalisation.
- In-Principle Takeover Agreement: Learn how the Class A creditor consortium is racing to secure an agreement with Ofwat in the coming weeks, focusing on regulatory adjustments to support the turnaround plan before launching the formal restructuring process.
- £3bn Super Senior Finance Package: Understand the critical funding structure with £1.5bn already drawn and access to the second £1.5bn “accordion” tranche dependent on a restructuring lock-up agreement or repeated creditor waivers.
- Major Debt Write-Offs Proposed: See the scale of the restructuring with creditors seeking to write off 25% of £16bn Class A debt, all £1bn Class B debt, and £2.5bn subordinated debt under the creditor-led recapitalisation plan.
- Multi-Stakeholder Complexity: Gauge the challenges ahead as Thames Water navigates negotiations with Ofwat, government stakeholders, and multiple creditor classes—including new consultation requirements under the Judiciary’s Restructuring Plan practice statement.
Executive Summary
Thames Water‘s second High Court restructuring process could now take place after June, sources said, as talks between the senior creditors and Ofwat about the recapitalisation continue.
The utility’s controlling creditors are in advanced discussions with the regulator about the terms of a takeover, and are aiming to reach an in-principle agreement with the support of all parties in the coming weeks.
Discussions are focused around the regulatory adjustments being sought by Thames Water’s creditor consortium (London & Valley Water) to support its turnaround plan – such as a less stringent regime governing operational performance – and any adjustments underpinning the in-principle agreement would be subject to consultation by the regulator Ofwat.
This would then be followed by a detailed Transaction Support Agreement covering the recap, then the launch of the High Court Restructuring Plan to implement the deal – known as RP2.
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