Recapitalisation Update - Agreement Reached with Class B Creditors

Thames Water Utilities Limited (the "Company" or "Thames Water") announces that it has entered into a transaction support agreement (the "Class B TSA") with certain Class A creditors (the "Consenting Class A Creditors") and certain Class B creditors (the "Consenting Class B Creditors"), including an ad hoc group of Class B Creditors (the "Class B AHG").

Thames Water, the London & Valley Water consortium ("L&VW"), Ofwat and other regulators have been engaged in constructive discussions regarding the proposed recapitalisation of Thames Water for the benefit of customers, employees and the environment. These discussions remain ongoing and, at this stage, the Company's Board, Ofwat, other regulators and relevant investment committees have made no decision to accept and take forward any proposal from L&VW to implementation.

The Class B TSA includes certain terms for the Class B Creditors' treatment (the "Class B Terms") under any future recapitalisation of the Thames Water group which is supported by Class A creditors and super senior creditors who hold at least 66.66% of the Class A and super senior debt respectively (the "Recapitalisation"), expected to be implemented by way of a restructuring plan ("RP2"). The Class B TSA, which is legally binding on its parties, was entered into on 16 October 2026 by the Company, the Consenting Class A Creditors, and Consenting Class B Creditors who hold in aggregate in excess of 60% of the Class B Debt.

The Class B Terms therefore remain subject to overall agreement of the terms of the Recapitalisation. As engagement remains ongoing, there is no certainty that the Recapitalisation will be finally agreed or, therefore, that the Class B Terms will ultimately be implemented.

Notwithstanding the progress that has been made on the terms and structuring of the Recapitalisation, the Company does not currently have sufficient certainty that RP2 can be implemented before certain senior debt matures and the stable platform period expires in March 2027. The stable platform period was introduced following the Thames Water group's interim restructuring transaction in 2025 (the "Interim Platform Transaction") to provide enough time to agree and implement the Recapitalisation. The Company's parent, Thames Water Utilities Holdings Limited ("TWUHL"), therefore intends to implement a further interim transaction to extend the maturities of certain senior debt instruments and the stable platform period (the "SPP Extension Transaction"). The Company is in constructive discussions with its stakeholders about the SPP Extension Transaction.

The Company remains focused on securing a market-led solution which delivers improvements for customers and the environment as soon as practicable.

Highlights of the Class B Terms

The current terms of the Recapitalisation continue to contemplate a write-off in full of the Class B Debt.

The Class B Terms provide that in exchange for the write-off of the full c.£1 billion of Class B Debt, Class B Creditors will receive:

• post restructured equity in the Thames Water group of a percentage which gives the Class B creditors a recovery of c.5.9%;
• the right to participate in £150 million of any new equity contemplated by the Recapitalisation^[1]; and
• 5.9% participation rights in respect of certain additional tiers of new debt or preferred equity which is included in the terms of the Recapitalisation.

The Class B Terms also provide for payment of certain costs incurred through to implementation of the Recapitalisation; consent fees and a work fee for certain Consenting Class B Creditors to be paid upon implementation of any Recapitalisation. The Company intends to continue servicing interest payments on Class A and Class B debt in full in cash up to the completion date of any Recapitalisation.

No fees or costs will be payable by the Company pursuant to the Class B TSA unless and until the Recapitalisation happens. Any such fees or costs will be funded from the proceeds of the Recapitalisation and not met using customer funds. The Consenting Class B Creditors have agreed to support both the SPP Extension Transaction and the Recapitalisation subject to (i) the Class B Terms being included in any Recapitalisation which is proposed by the Thames Water group; and (ii) Ofwat having launched a public consultation in relation to the Recapitalisation on or before 30 December 2027. The Class B TSA does not impose any obligation on the Company or the Thames Water group to propose a Recapitalisation (whether on any terms proposed by L&VW or otherwise) - the terms of the Recapitalisation (other than the treatment of the Class B Creditors, as set out above) continue to be discussed between the Company and its relevant stakeholders.

Class B Creditors are encouraged to accede to the Class B TSA. Class B Creditors can contact the Company with questions on how to accede to the Class B TSA.

Discussions with the Company's remaining financial stakeholders in relation to the terms of the Recapitalisation are expected to continue.