LONDON — A group of Thames Water creditors, known as London & Valley Water, is discussing a £10bn rescue plan with officials from the UK regulator Ofwat. The meetings occurred in recent days.

The proposed plan involves injecting £3.35bn of new equity into Thames Water and providing £3.25bn of fresh debt. Environment Secretary Emma Reynolds objected to the proposal in mid-June, stating, "The proposal would place an undue burden on consumers."

Thames Water, which serves 16 million customers in London and the Thames Valley, has been working to prevent financial collapse for nearly three years. The company carries £17.6bn of debt, with approximately £14bn of its senior debt held by a group of 100 institutional investors. Industry estimates suggest the utility could run out of money in October if a resolution is not found.

The creditor group includes financial firms such as US hedge fund Elliott Investment Management, Apollo Global Management, Silver Point Capital, and BlackRock. Creditors have indicated a willingness to bid for Thames Water even if the utility undergoes temporary nationalization through a special administration regime (SAR).

London & Valley Water has argued that a special administration regime would require multiple billions of pounds of taxpayer money and that the duration of such a regime is uncertain. The group also contended that the regime would create further uncertainty for the company's 8,000 workers and its supply chain. Under a special administration regime, an independent insolvency expert would operate Thames Water on behalf of taxpayers to maintain services before securing a buyer, and the company's debt and interest payments could be temporarily frozen. In such a scenario, the government would have an obligation to seek maximum value for creditors.

The government recovered nearly the entire cost of temporarily nationalizing the energy provider Bulb four years ago, agreeing to sell it to Octopus for £3bn. Separate from the creditor group, Castle Water has indicated interest in bidding for Thames Water. Thames Water bosses attempted to sell the utility to the US investment group KKR last year, but the deal did not materialize. The creditor group declined to comment on the ongoing discussions.

Thames Water serves 16 million customers in London and the Thames Valley. The company carries £17.6bn of debt. A Thames Water spokesperson said, "We continue to work with all parties to reach an agreement that supports Thames Water's long-term financial stability and ensures the uninterrupted delivery of our biggest infrastructure upgrade in 150 years while continuing to meet the needs of our 16 million customers."