Thames Water Pushed £12 Billion of Debt to 2028 While London’s Reservoirs Sat at 56%

For 111 days, Thames Water’s customers have not been allowed to use a hosepipe. On Monday the company said creditors holding more than £12 billion of its secured debt had agreed to move repayments due in 2027 to March 2028.

The announcement came at 02:01. It was signed by the chief executive, Chris Weston, as a director of Thames Water Utilities Limited. A second followed at 07:01, from the vehicle that issues the super-senior debt keeping the company liquid, opening the allocation of a £600 million first tranche of new emergency funding.

The deal the creditors signed is called the SPP Extension Transaction. It has to be imposed through two restructuring plans under Part 26A of the Companies Act 2006, and the paperwork for that is already filed. The practice statement letter, dated 8 November and published through Kroll, is a 93-page document from Thames Water Utilities Holdings Limited to its creditors, and it carries the project’s working name: Project Crabtree. The convening hearing is on 27 November. It is a single joint hearing at the Companies Court on Fetter Lane. Under the extension plan, no principal falls due before 20 March 2028. The vote needs 75% in value in each creditor class. A numerical majority is needed too. Creditors who want the consent fee have until 11 December to sign, and the fee is paid in debt rather than cash.

The Environment Agency declared drought in London and the Thames Valley on 29 July, and Thames Water marked 100 days of it on 5 November. Total London reservoir storage stood at 56% on 3 November. The average is 77%. Farmoor Reservoir in Oxfordshire was at 76%, against a 90% average. The company’s head of water resources, Julie Morton, said the region had faced “one of our most challenging summers in recent memory”, with five heatwaves, and that “recovery from a drought that developed over many months will take time, particularly when the ground is so dry”. The Environment Agency calculates that 120% of average rainfall is needed over the next six months to end the drought by spring. The National Drought Group meets on 12 November.

England’s reservoirs stood at 60.1% of capacity on 3 November, 17% below average for the time of year, and less than a millimetre of rain had fallen in England in November to that date. The Environment Agency has confirmed 425 drought and dry-weather incidents in England this year, already more than the full-year totals for 2022, which was 380, and for 2025, which was 321. Eight reservoirs or reservoir groups are classed as exceptionally low. Fifteen reservoirs are less than half full and only three are normal for the time of year. Restrictions on abstraction licences, which limit how much water farms and other holders can take from rivers, rose to 336 in a week from 207. Ten water companies now have hosepipe bans in force across all or part of their areas.

Household demand is down by up to 3% in London and up to 6% in the Thames Valley and Home Counties since the ban began, according to the company’s own drought page. The company says it is repairing more than 1,000 leaks a week, around 20% more than normal, with 18% more staff finding and fixing them than last year. Leakage is down by more than 15% since 2019/20, and more than 75,000 acoustic sensors are listening for it. More than 100 kilometres of water mains have been replaced since spring 2025. The company plans £20 billion of investment over the next five years, and the ban, the page says, remains in place because sustained rainfall is still needed before it can be lifted.

Ofwat’s final determination in December 2024 allows Thames Water to raise the average annual bill from £436 to £588 by 2029/30, a rise of £152, or 35%, before inflation is added. The company had asked for 53%. It asked Ofwat to refer the determination to the Competition and Markets Authority in February 2025, and Ofwat agreed to defer the reference, twice, and then indefinitely. The authority’s final report on five other water companies, published in March 2026, treats Thames Water as a third party and does not apply to it. Campaigners told The Guardian in October that the £2.4 billion emergency loan could add £40 to each household’s bill in interest alone. The company says the consent fees and transaction costs for the extension will be funded solely by creditors and not from customer funds, and the extension itself changes no bill.

More than 100 creditors hold about £17 billion of a debt pile of more than £20 billion. The group that wants to take the company over, London & Valley Water, is largely hedge funds and distressed-debt investors. Most of them have never been publicly named. A cross-party committee of MPs said in September that the consortium could sell the company again as soon as 2030, and recommended the government reject its proposals and put Thames Water into special administration instead. “Thames Water is at the end of the road,” the committee said. Its chairman, Alistair Carmichael, said: “We believe Thames Water can be turned around, but not by giving the keys back to the people who have been joy riding in the family car.” The committee traced the trouble to Macquarie, which owned the company from 2006 to 2017, and counted 13 extensions of the restructuring deadline. The £3 billion emergency loan the creditors provided carries a 9.75% interest rate and will cost the company more than £800 million in total, the committee said, and more than £900 million in performance penalties will accrue over the next five years on top of existing fines. The shareholders walked away in March 2024, calling the business “uninvestable”.

London & Valley Water’s current terms, as reported by The Times, are a £9.6 billion write-off of existing debt, a partial debt-for-equity swap, £3.35 billion of new equity and £6.65 billion of new debt tranches. In return it wants the regulator to forgo or roll over up to £1 billion of the penalties and fines the company expects to rack up over the next five years. The former environment secretary, Emma Reynolds, wrote to Ofwat about the consortium’s March offer that she was “not yet convinced that the Proposal demonstrates sufficient protection for consumers’ interests”, citing bill impacts, reduced performance standards and investment deferrals “in some cases by up to a decade”. Her successor, Dame Angela Eagle, has said that “the status quo is not an option for Thames Water”. The prime minister, Andy Burnham, said before he took the job that public ownership was “absolutely an option” and “for Thames Water that is what should be done”. The Guardian reported on Tuesday that the creditors are preparing what they are calling a final offer, while the prime minister has been reluctant to take the company into state ownership despite his earlier support. One option under consideration, The Guardian reported in October, is converting about £100 million of outstanding fines into a government stake.

In a thread about the 100 days of drought, one Londoner wrote: “Every single autumn and winter the roads are flooded, more water leaking out than I might hosepipe into my garden (which suffered because of the hosepipe bans which means no flowers which means fewer bees and we all know that bees are basically the foundation of our ecosystem, right?) Roads are routinely ripped up for pipe repairs but reinstated in the cheapest and crappest possible way which means endless potholes And do I get to change supplier? No I do not because functional monopoly, with a little sprinkle of wealth extraction and contempt for ‘customers’.” Another wrote: “Im concerned because it seems to me a competent government would be announcing specific plans to protect us from similar events in the future, and ours hasnt done that. Are we looking at some desalination capacity? More reservoirs? Who is paying for it? If someone with actual knowledge and expertise could tell me ‘here is a plan that we’re working on’ that would reassure me a bit, but I just see silence on this front, as if everyone at the top thinks this is a one off event or something.” A third, before anyone mentioned reservoirs, wrote: “Before someone mentions reservoirs Thames Water have been wanting to build one near Abingdon for 20 years but the NIMBYS (who of course never use any water) kicked off.”

“The government already gave them permission to put rates up by 30% just to buy time,” one commenter wrote on Monday, in the thread about the debt proposals. The company calls the agreement “an important milestone in Thames Water’s progress towards a recapitalisation”. “stop kicking the can down the road. Let them go bankrupt, write off the debts, then nationalize the now debt-free company,” wrote another. “The only way should be nationalising it WITHOUT taking on the debt. The debt should not be a taxpayer issue, we shouldn’t be bailing out debt because the shareholders rinsed the company through dividends. Let it go bust, buy it for a £1, crack on with improvements,” wrote a third. A fourth, calling himself a valued customer, wrote: “As a ‘valued customer’ of Thames Water, it’s quite clearly going to go under. Stop kicking the can and let it go bust. Put in the operator of last resort and take it from there.”

The extension buys the company until March 2028. It does not reduce what the company owes, and it does not oblige anyone to agree a recapitalisation: after it takes effect, the group must use reasonable endeavours to agree one supported by a majority of its Class A creditors, but it is not obliged to propose one. The water still needs the winter rain. The rain is not in the timetable. The company’s own page says the ban remains in place and sustained rainfall is still needed before restrictions can be lifted. The court dates run to February. The reservoirs need six months of rain at 120% of average.

Creditors who signed the agreement have undertaken to vote for the plans and not to take enforcement action over breaches the transaction causes. Once a judge sanctions the plans, the orders go to the registrar, and the transaction takes effect within ten business days.