Thames Water spent £136m on securing emergency funding, leaked doc suggests

Thames Water spent no less than £136m on the hassle to safe emergency funding over 12 months, in keeping with a leaked doc that means prices outstripped the £130m the struggling utility paid in fines.

The regulation companies Linklaters and Akin Gump acquired £45m and £26m respectively throughout the monetary yr to March 2025, and one other 10 companies have been paid greater than £1m, in keeping with a doc itemizing “atypical expenditure” for the yr, seen by the Guardian. It’s the first time the charges paid by Thames Water have been detailed publicly.

The water firm scrambled within the final yr to safe emergency funding to keep away from momentary nationalisation because it struggled below a £20bn debt pile. That effort led to a court docket showdown in January and February to power losses on some debt holders in alternate for as much as £3bn of rescue money to see it by way of this yr.

Thames, which is rapidly burning by way of that money, is in talks with the regulator, Ofwat, over a takeover by collectors who maintain a lot of its debt, after the non-public fairness agency KKR walked away from an public sale.

Lenders, starting from massive institutional buyers comparable to Aberdeen, BlackRock, Invesco and M&G to US hedge funds together with Elliott Administration and Silver Level Capital, suggest injecting £5.3bn in new debt and fairness. The collectors argue they may want reduction from future fines – and presumably the reversal of previous fines – if they’re to spend money on Thames, which offers water and sewage providers to 16 million clients in London and south-east England.

But the figures present that charges paid to advisers within the course of to refinance and promote Thames – below the codename Challenge Crabtree – rival the fines levied by Ofwat for sewage spills and unlawful dividend payouts within the final yr. Thames was compelled to pay the charges for its personal advisers and for these of collectors, as is common in restructuring processes.

Thames has additionally confronted criticism for refusing to get better thousands and thousands of kilos in bonuses paid to senior managers. The UK water trade can be prone to face scrutiny over the approaching weeks, as heatwaves result in drought situations in some components of the nation. Yorkshire Water and South East Water, overlaying Kent and Sussex, introduced hosepipe bans within the final week.

Authorized charges associated to Crabtree seem like considerably bigger than Thames’s earlier estimate, which have been supplied in a letter dated 30 Might to Alistair Carmichael, the Liberal Democrat MP who chairs parliament’s setting committee. In that letter, the Thames Water chief govt, Chris Weston, wrote that “legal fees” in relation to the recapitalisation have been £67.6m. Nevertheless, the inner doc means that charges paid to Linklaters, Akin Gump, A&O Shearman and Quinn Emanuel totalled £79m that yr. Thames didn’t clarify the disparity.

Consultancies AlixPartners, Bain, Deloitte, KPMG, Kroll and Teneo have been additionally paid £39m collectively below distinctive spending throughout the yr. AlixPartners acquired £12.8m, together with quantities not associated to the recapitalisation. The funds to the corporate continued after companion Julian Gething was seconded to Thames Water to behave as its chief restructuring officer in December 2024. Bankers at Jefferies representing the collectors acquired £3.1m, whereas Rothschild acquired £1.5m.

Individuals near the method mentioned the charges mirrored its complexity, involving a restructuring price billions of kilos, tons of of collectors, and the UK’s largest water firm.

The very best authorized charges coincided with the court docket case. The paperwork recommend Linklaters was paid £10.1m in January 2025 and £5.5m in February, whereas Akin Gump was paid £3m after which £3.7m.

Thames Water and the collectors have mentioned all charges associated to the recapitalisation can be funded by lenders slightly than clients. However, the cost of charges represents spending of cash that may in any other case have been out there for funding in Thames’s infrastructure.

Ofwat has additionally mentioned clients won’t bear the price of the Challenge Crabtree charges, arguing that its calculation of water invoice will increase doesn’t bear in mind advisory prices.

Charlie Maynard, a Liberal Democrat MP, challenged the debt restructuring in court docket, arguing it might be higher for invoice payers for the corporate to enter particular administration – primarily a short lived nationalisation. He drew consideration to the excessive degree of charges in court docket.

“This a massive fee bonanza for advisers,” Maynard mentioned. “Whether these charges are directly put on our bills or loaded on to the walking disaster that is Thames Water’s balance sheet, either way this is money out the door. If the customers aren’t paying, can Ofwat explain who is?”

A Thames Water spokesperson mentioned: “Customers will not pay for these fees, and fees relating to the recapitalisation will not lead to an increase in any customer bills. Adviser fees are commercially sensitive information, so we will not comment on their accuracy and cannot verify the source of information.”

A spokesperson for the collectors mentioned: “The creditors have submitted a £17bn recapitalisation of Thames Water, expected to represent the largest financial loss suffered by investors on an infrastructure asset in British history. Several billion pounds of debt will be written off to restore financial resilience, improve environmental performance and restore customer trust as quickly as possible, with no taxpayer risk.”

AlixPartners, KPMG and Teneo declined to remark. The opposite advisers have been approached for remark however had not responded by the point of publication.