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A RESCUE plan to prevent the collapse of Thames Water could see a chunk of its debt written off and a multi-billion pound investment to stabilise the company.

The plan has been submitted by London & Valley Water, a consortium of financial institutions and investors which have come together to restructure the utility company.

Under proposals, the consortium will spend £20.5bn over the next five years to improve operational performance, invest in aging infrastructure, rebuild customer trust and improve environmental performance and customer service.

The plans include a commitment to wipe about a third of Thames Water’s near £20bn debt and to invest an initial £5.4bn to help rebuild the business.

The consortium hopes its proposals will avoid the need for taxpayer funding or government support to prop up the company, enabling its return to the public markets “as soon as possible”.

It said investment will improve capacity across sewage treatment works to support new housing developments and install the “lastest, cutting edge technology” at all major treatment works.

The plan would be led by a new management team accountable for a long-term plan to reduce sewage spills and water leakage, clean up waterways, improve customer service and strengthen “business resilience” in the face of extreme weather events and population growth.

According to the BBC, London & Valley said no dividends would be paid out to shareholders over the duration of the plan, while new shareholders will make a commitment not to sell the business before March 2030.

A spokesman for Thames Water said the announcement underscores the consortium’s “commitment” to fixing Thames Water Utilities United’s underlying challenges without relying on taxpayer funding.

He added: “We look forward to working with stakeholders to deliver a market-led solution that benefits customers and the environment.”

The plan is still subject to ongoing discussions and the consortium hopes an agreement will be reached in the autumn.

The government has been on standby to supervise a form of temporary nationalisation since fears of a collapse first emerged more than two years ago.

Earlier this year, the utility company reported a loss of £1.65bn for the financial year to March, with a debt pile totalling £16.8bn.

Thames Water has come under fire for repeated sewage leaks and was issued a £122.7m fine in May for breaching rules on spills and shareholder payouts.

In July, it was revealed the company had used an emergency loan designed to keep it afloat to pay almost £2.5m worth of bonuses to its senior managers.

The utility company has also been criticised for its impact on water quality, including of its impact on the River Thames.

In Henley, testing of the river’s water quality revealed high levels of E. coli were present, exceeding the upper limit safe for water users.

Henley MP Freddie van Mierlo has previously called on the government to to help secure bathing water status for the Thames in Henley.

Bathing water status would place a legal obligation on polluters and government to test water quality during the bathing season and improve water quality.