Thames Water — Restructuring & Recapitalisation Analysis
An analysis of the proposed recapitalisation using reported RCV, separate treatment of new and reinstated debt, an explicitly illustrative debt-capacity scenario and creditor economic-recovery sensitivities.
Pre-restructuring financials at 30 September 2025 · Proposal terms at 16 March 2026
Proposed capital reset
Publicly disclosed proposal terms
| Measure | Amount / treatment |
|---|---|
| New equity | £3.35bn |
| New day-one debt | £3.25bn |
| Committed undrawn debt | Up to £3.30bn |
| Class A debt | 30% principal write-off; reinstated balance remains part of the capital structure |
| Class B / subordinated debt / existing equity | Full write-off |
Reported starting position
At 30 September 2025, Thames Water reported statutory net debt of £17,626.9m, covenant net debt of £19,337m, covenant net debt net of TWSSI cash of £18,798m, RCV of £21,893m and senior gearing net of TWSSI cash of 85.9%.
Proposal mechanics
The London & Valley Water proposal announced on 16 March 2026 contemplated £3.35bn of new equity and up to £6.55bn of new debt, comprising £3.25bn of new day-one debt plus up to £3.30bn of committed undrawn debt. It proposed a 30% Class A principal write-off, full impairment of Class B debt and subordinated debt / existing equity, 52% day-one net leverage, leverage rising and stabilising at about 60% by the end of AMP8, and a long-term net-gearing target of 65% or less.
The £3.25bn figure is new day-one debt, not total post-restructuring debt. Reinstated Class A debt must also be included when describing the final capital structure.
RCV & debt-capacity scenario
The model uses the reported £21.893bn RCV. If RCV grows 5% annually for four periods and target gearing rises to 60% by FY30, the resulting illustrative FY30 debt-capacity envelope is approximately £15.97bn. This is a scenario, not a forecast of actual post-restructuring debt.
Nominal principal retention versus economic recovery
A 30% principal write-off means 70% of Class A principal is nominally retained, but economic recovery also depends on the coupon, maturity and required discount rate of the reinstated debt. The workbook therefore includes a present-value sensitivity rather than equating retained principal with recovery value. In an illustrative £15bn claim / 6% coupon / 10-year maturity / 8% discount-rate case, economic value is £9.09bn, or 60.6% of the original claim.
Creditor-priority framing
The creditor-priority framing is that junior claims should not retain value while senior claims remain impaired, subject to the actual restructuring terms.
Sources & methodology
The workbook separates reported figures, proposal terms and editable assumptions. It does not present the haircut schedule as an enterprise-value waterfall.
Downloads
The PDF report and Excel model include the reported starting position, proposal terms, RCV/debt-capacity scenario and creditor economic-recovery sensitivity.
Disclosure: Independent portfolio research for educational purposes. This is not investment advice or a recommendation to any creditor.