The 2025 rescue of Southern Water's holding companies

analysisThe joint administrators of Greensands (UK) Limited, in proposals dated 11 July 2025 and filed at Companies House, give an account of the months before the sale. As they summarise it, Greensands Holdings Limited (GHL) sent a consultation letter to its investors on 12 March 2025. After Ofwat's AMP8 final determination, the group had assessed that the operating company, Southern Water Services Limited, needed additional funding of £900m to continue as a going concern and would otherwise likely be unable to comply with its Ofwat licences. Notes with about £427m outstanding, issued by Southern Water (Greensands) Financing plc and guaranteed by all the HoldCo companies, fell due during 2025 and could not be repaid from available liquidity, and events of default on about £414m of MidCo facilities were expected from November 2025. ¹

analysisGHL wrote to its investors again on 28 March 2025 and, in late March 2025, issued a Rescue Issue Notice seeking about £1.3bn to meet the operating company's liquidity requirement and repay the HoldCo notes. No investor accepted the offer of Rescue Securities, and the Rescue Issue was terminated on 10 April 2025. The one investor that had given a non-binding expression of interest then negotiated with the HoldCo and MidCo creditors. A debt-for-equity arrangement would have needed a unanimous decision of GHL's investors, which was considered unlikely, so the solution adopted was for a new company controlled by that investor ('New BidCo') to acquire the shares of the target companies and, subject to a scheme of arrangement at operating-company level, provide new equity. ¹

analysisThe proposals also record a sale process. On 6 June 2025 Evercore, the group's financial adviser, invited GHL's investors to make fully financed binding offers for all the shares of the two target companies by midday on 19 June 2025, on terms that included repayment in full of the MidCo facilities and HoldCo notes on completion. Five investors accessed the data room, but no binding offer was submitted by the deadline. On 30 June 2025 the proposed administrators received an unconditional offer letter from Sandstone Bidco Limited for the entire share capital of the target companies. Completion, first expected on 30 June 2025, took place on 4 July 2025 after delays in executing the HoldCo and MidCo lock-up agreement. ¹

analysisThe administrators describe Greensands (UK) Limited (company number 06366235) as incorporated on 10 September 2007, with no employees and no trade, acting as a holding company within the group that ultimately operates Southern Water. Greensands Europe Limited (06366236) owned 100% of its 2,000,000 ordinary shares and was itself 100% owned by Greensands Holdings Limited; Macquarie Asset Management, through a Macquarie group company, was described as the majority shareholder in the consortium of investors owning Greensands Holdings and therefore the ultimate controlling party of the group. The company entered administration on 4 July 2025. Its directors appointed Geoffrey Paul Rowley and Anthony John Wright of FRP Advisory Trading Limited, insolvency practitioners, as joint administrators in proceedings in the High Court of Justice (court reference 004563 of 2025), with consent given on 4 July 2025 by GLAS Trust Corporation Limited as holder of the qualifying floating charge; GLAS had replaced Deutsche Trustee Company Limited as security trustee on 12 June 2025. The notice of the administrators' appointment (form AM01) names the High Court of Justice and the directors as the appointing body. ^{1 2 3}

analysisAt the date of the proposals the company's two directors were Richard Manning, a director since October 2023, and Alan Fort, a director since April 2025. Companies House's filing history records the director changes from 2022: Ian James McAulay's appointment ended on 30 June 2022 and Lawrence Karl Gosden was appointed on 1 July 2022; Sebastianus Antonius Theodorus Boelen's appointment ended and Nadim Ahmad was appointed on 31 July 2022; Nadim Ahmad's appointment ended and Stuart Neil Ledger was appointed on 27 January 2023; and Lawrence Karl Gosden's appointment ended and Richard Denley John Manning was appointed on 25 October 2023. On 14 April 2025, according to filings made on 28 April 2025, the appointments of Stuart Neil Ledger and William David George Price ended and Alan James Fort was appointed; Price's appointment date is not in the retained filing history. ^{1 2}

analysisOn 4 July 2025, immediately after their appointment, the joint administrators sold the company's shareholdings in Greensands Junior Finance Limited and Southern Water (Greensands) Financing plc to Sandstone Bidco Limited in a pre-packaged sale. Sandstone's unconditional offer was to acquire the entire share capital of each target company for £1, and the proposals record a total sale consideration of £2. The offer also provided for a debt-for-equity exchange of the secured debt guaranteed by Greensands (UK) Limited and each target, a solvent winding-up or dissolution of Greensands (UK) Limited, the restatement and amendment of secured debt instruments of the targets' subsidiaries, and a commitment of at least £655,000,000 of new equity funding for those subsidiaries. Appendix F of the proposals lists five unsecured, intra-group creditors totalling £4,082,973,880: Greensands Europe Limited (£3,969,958,771), Greensands Holdings Limited (£112,944,591), Southern Water (Greensands) Financing Plc (£50,000), Greensands Investments Limited (£20,175) and Southern Water Services Limited (£343). The administrators expected no distribution to unsecured creditors, envisaged that the inter-company balances would be assigned to the purchaser on completion of the wider restructuring, pursued objective (c) of an administration (realising property to make a distribution to secured or preferential creditors) and proposed to take steps to dissolve the company. ¹

analysisThe administrators treated the sale as a connected-party transaction, because Macquarie was linked both to Greensands (UK) Limited, whose group it controlled through its majority stake in Greensands Holdings, and to the buyer, which was majority owned by funds managed by Macquarie Asset Management. Sandstone obtained an independent evaluator's qualifying report under the Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021, which concluded that the consideration and the grounds for the disposal were reasonable. The administrators did not obtain a valuation, reasoning that no investor had been willing to provide further equity or buy Rescue Securities, so that value broke within the HoldCo notes. Sandstone Bidco Limited (company number 16482992) had been incorporated in England and Wales on 29 May 2025 by MSCIF Sandstone Ventures S.à r.l., with Richard Greenleaf, Catherine Harber and Susana Leith-Smith as its directors. According to the administrators, its two ordinary shares were owned by Sandstone Midco Limited and its primary purpose was a consensual recapitalisation of the target companies and their subsidiaries; the supplementary prospectus of 30 July 2025 describes it as a special purpose company established by Macquarie Asset Management to acquire control of the SWS Financing Group. ^{1 4}

analysisThe purchase changed the top of the group. Southern Water's 2025–26 annual report states that on 31 March 2025 Greensands Holdings Limited was the ultimate parent company and controlling party of Southern Water Services Limited, with MSCIF Wight Bidco Limited as its majority shareholder on behalf of funds managed by Macquarie Asset Management, and that Greensands (UK) Limited was an intermediate parent company of Southern Water. Through the purchase of 4 July 2025 Sandstone Bidco acquired Greensands Junior Finance Limited, which replaced Greensands Holdings Limited as the parent at the top of Southern Water's group, and so became an indirect holding company of Southern Water Services Limited from that date. Ofwat's consultation of September 2026 adds that MAM-managed funds remained the majority shareholder, and the supplementary prospectus of 30 July 2025 states that Sandstone Bidco was then 100% indirectly owned by MSCIF Luxembourg C Holdings S.à r.l. ^{5 6 4}

analysisCompanies House's filing history for Greensands (UK) Limited records the notice of the administrator's appointment (AM01) and a change of registered office from Southern House, Worthing, to 2nd Floor, 110 Cannon Street, London EC4N 6EU, both filed on 17 July 2025, followed by the administrators' proposals (AM03, 18 July 2025), notice of deemed approval of the proposals (AM06, 1 August 2025), a statement of affairs (AM02, 18 August 2025), a progress report (AM10, 28 January 2026), revised proposals (AM09, 18 February 2026) and a notice of end of administration (AM21, 19 February 2026), with which the retained filing history ends. Companies House's appointment listing for Lawrence Karl Gosden, retrieved in October 2026, shows Greensands (UK) Limited with company status 'Active' and Gosden as a former (resigned) director; the records do not show the company's status after the notice of end of administration beyond this listing. ^{2 7}

analysisOn 8 July 2025 Southern Water Services Limited accepted an offer of equity support from a consortium led by funds managed by Macquarie Asset Management by signing up to an equity commitment letter (ECL) from Sandstone Bidco Limited (the 'Sponsor'). According to the supplementary prospectus of 30 July 2025, the ECL comprised a legally binding equity commitment of £655 million (the 'Initial AMP8 Equity Commitment') and confirmation of intent to provide further commitments of up to £545 million, with a minimum of £245 million, by December 2025. The supplement lists the conditions to the initial commitment as at 30 July 2025: completion of a debt-for-equity exchange (the 'Holdco Debt Exchange') of existing debt of Southern Water (Greensands) Financing plc, Greensands Holdings, Greensands (UK), Greensands Junior Finance and Greensands Senior Finance; satisfaction of the conditions to a restatement of the debt of Greensands Finance Limited ('Midco'), Greensands Finance Holdings Limited and a company the supplement calls Greensands Finance PLC, including, where required, a final sanction order for a Midco scheme of arrangement under Part 26 or Part 26A of the Companies Act 2006 binding the existing term facility lender; no termination of a separate Holdco/Midco lock-up agreement dated 8 July 2025; delivery of a final sanction order for a scheme of arrangement, the 'SWS Scheme'; no downgrade by S&P or Fitch below investment grade; and satisfaction of all these conditions by 5:00 p.m. on 31 October 2025. ¹

analysisAlso on 8 July 2025, SWS and the other obligors of its financing group entered into a lock-up agreement (the 'SWS LUA') with, among others, Sandstone Bidco as Sponsor, MSCIF Luxembourg C Holdings S.à r.l. as 'Investor', and holders of Class A debt representing, at 30 July 2025, about £5.5 billion and more than 72 per cent by value of outstanding Class A debt, including all liquidity facility providers, 98 per cent of hedge counterparties and about 65 per cent of other Class A debt. Kroll Issuer Services Limited acted as lock-up agent. The agreement's principal purpose was to secure creditor support for the SWS Scheme and related STID proposals so as to facilitate the injection of the Initial AMP8 Equity Commitment; creditors acceding by one business day before the record date were entitled to a fee of £1,000. ¹

analysisThe supplement explains that under SWS's Common Terms Agreement it was an event of default if any two rating agencies rated the Class A debt below investment grade (the 'Ratings EoD'), so that a further downgrade by Standard & Poor's or Fitch would be an event of default unless Moody's had first restored an investment-grade rating. It gave the ratings of the Class A unwrapped bonds as BBB- (CreditWatch Negative) from Standard & Poor's, Ba1 (stable) from Moody's and BBB- (stable) from Fitch. The Ratings EoD was to be removed permanently if SWS received the full Initial AMP8 Equity Commitment in cash by 31 March 2026, and to be waived conditionally once SWS received £505 million of it (the 'Initial Equity Injection'), which SWS expected by early November 2025 with a long-stop date of 28 November 2025. Separately, according to the compliance certificate dated 29 July 2025 for the calculation date of 31 March 2025, a Trigger Event in relation to SWS's Conformed Class A Adjusted ICR and Conformed Class A Average Adjusted ICR had occurred and was continuing, both ratios standing at -0.4 against trigger levels of 1.30x and 1.40x, and SWS expected to remain in a Trigger Event until at least March 2026. ¹

analysisThe same supplement states that each obligor of the SWS Financing Group, including Southern Water Services Limited, prepared its financial statements for the period ending 31 March 2025 on a going-concern basis with a material uncertainty: the directors expected the Initial AMP8 Equity Commitment to be received, but when the statements were finalised it remained subject to conditions outside their control. If the obligors could not continue as going concerns, the supplement adds, this might lead to a special administration order for SWS. ¹

analysisOn 9 October 2025 Mr Justice Richards, in the High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD), sanctioned two schemes of arrangement under Part 26 of the Companies Act 2006 in [2025] EWHC 2690 (Ch) (cases CR-2025-005763 and CR-2025-005674): one of SWS Holdings Limited (the 'SWS Scheme') and one of Greensands Financing Plc (the 'MidCo Scheme'), which were conditional on each other. He had convened the creditors' meetings by orders of 2 September 2025, with reasons in [2025] EWHC 2318 (Ch); the National Archives' Find Case Law service lists the two judgments under the search term 'Greensands'. The judge described the SWS Scheme as narrowing the definition of an event of default in exchange for much-needed equity funding: without the amendment, a ratings downgrade would accelerate principal and interest on the debt of the 'SWS Borrowers', and SWS Holdings Limited, which had throughout been a guarantor of that debt, would face 'ricochet' claims through a deed of contribution. The amendments were to become fully effective only if the Sponsor, which the supplementary prospectus defines as Sandstone Bidco Limited, made the equity injection; relying on Mr Ledger's evidence, the judge found a high degree of likelihood that the Sponsor would become unconditionally obliged to make it. ^{1 2 3}

analysisAccording to the sanction judgment, both schemes were approved by overwhelming majorities and no one appeared to oppose them. In the SWS Scheme, four class meetings were held on 30 September 2025: turnout was 100% in Classes A1, A2 and A3 and 93.45% by value in Class A4, where 758 scheme creditors attended (757 by proxy), and 100% of those voting in every class voted in favour. The judge took into account the £1,000 consent fee for each creditor acceding to the lock-up agreement and found that it could have made no realistic difference to the vote. 'Mr Ledger' chaired the four class meetings, provided the chairperson's report and gave witness statements on both schemes; the judgment gives no first name. Companies House lists Stuart Neil Ledger as a director of both scheme companies, SWS Holdings Limited and Greensands Financing Plc, and the 2025–26 annual report names Stuart Ledger as Southern Water's Chief Financial Officer; on that basis this dossier identifies the chairperson as Stuart Neil Ledger, a director of SWS Holdings Limited in September 2025, an identification by surname, office and role in the scheme companies rather than by a full name in the judgment. ^{2 3 4}

analysisTwo days after the SWS Scheme meetings, on 2 October 2025, SW (Finance) I plc issued £100 million of bonds, the 'Tap Bonds', which the SWS Scheme would not bind. According to the sanction judgment, their beneficial owners instructed the security trustee to execute the same amendment agreement, and their terms were thereby altered by contract in the same way as the scheme debt. ²

analysisIn the MidCo Scheme, nineteen creditors attended the single class meeting, representing 100% by value of the scheme debt, and all voted in favour. CBA, the lender of record under the MidCo Facility Agreement, had been thought at the convening stage to oppose the scheme but voted its rights in favour; by the time of the meeting it had agreed to sell its interest in the facility to Bank of America Europe Designated Activity Company (the 'New Lender'), whose transfer completed too late for it to vote. Before the sanction hearing of 9 October 2025 the New Lender confirmed its support for the MidCo Scheme on its own behalf and for the other parties with an economic interest in the facility, and undertook not to frustrate it. The Find Case Law summary of the convening judgment identifies the borrower ('BorrowerCo') as Greensands Finance Limited. In finding that creditors could reasonably approve the MidCo Scheme, the judge noted projections that holders of MidCo Scheme debt could realistically expect 100% recovery under the scheme, against perhaps as little as 2.4% in the comparator scenario. He also approved the scheme's provisions releasing directors, noting that they preserved an insolvency office-holder's right to bring claims against advisers and directors. ^{2 1}

analysisSouthern Water's 2025–26 annual report states that after the restructuring the investors of Sandstone Bidco Limited (SBL) injected £505.0 million of equity into the group in November 2025 and a further £395 million in March 2026, all received indirectly by Southern Water, bringing total investment into the group since 2021 to over £2.5 billion; none of the proceeds were paid to the existing shareholders of Greensands Holdings Limited. SBL also committed a further £300 million of binding equity to be drawn on or before 31 March 2027, to support a reduction in net debt to regulatory capital value from about 74% at 31 March 2025 to 65% from 2029. Ofwat's September 2026 consultation likewise states that in March 2026 Southern Water announced the receipt of new equity totalling £900 million from SBL, via funds managed by Macquarie Asset Management. ^{1 2}

analysisCompanies House's filing history for Southern Water Services Limited records allotments of shares on 13 November 2025 (statement of capital GBP 37,776,665, filed 21 November 2025) and on 31 March 2026 (GBP 37,976,665, filed 16 April 2026). The annual report's share notes state that 100,000 ordinary shares were issued to SWS Holdings Limited on 13 November 2025 at £5,050 each (premium £504.9 million), and two further blocks of 100,000 ordinary shares on 26 March 2026, at £1,500 each (premium £149.9 million) and at £2,338.31 each (premium £233.7 million). Its statement of changes in equity shows shares issued in 2025–26 of £822.4 million (£0.3 million share capital and £822.1 million premium), the addition to share premium being shown net of issue costs of £66.4 million. The date of the March issue differs between the records: the annual report gives 26 March 2026 for both blocks, whereas the filing history describes the return as a statement of capital following an allotment of shares on 31 March 2026. Only the filing-history description of that return was retained, not the form itself, and neither record explains the difference. ^{3 1}

analysisEarlier entries in the same filing history show a statement of capital of GBP 176,665 on 22 July 2022 (form SH02, filed 2 May 2024) and, after an allotment of shares on 19 October 2023, a statement of capital of GBP 37,676,665 (second filing RP04SH01, filed 5 May 2024). The annual report records that the second equity injection after the 2021 Macquarie purchase, £550 million made in October 2023, was split between £375.0 million injected into Southern Water Services and £175 million retained in group companies to support interest payments on external debt. The dates of these filings coincide with funding events described elsewhere: the 19 October 2023 allotment falls in the month in which the annual report places the £375.0 million injection, and 22 July 2022 is the date on which, according to the annual accounts of Southern Water (Greensands) Financing plc, the Southern Water Services board approved a distribution to Southern Water Capital Limited that included a partial redemption of preference shares. This is a comparison of dates only: the filing-history entries do not state the purpose of the allotment or of the SH02 statement. ^{3 1 4}

analysisSandstone Water Holdings Limited (company number 16482350), which the 2025–26 annual report describes as a parent company of Greensands Junior Finance Limited whose principal investors are funds managed by Macquarie Asset Management, filed statements of capital following allotments of shares on 13 November 2025 (GBP 50,000) and 31 March 2026 (GBP 81,376), the same dates as Southern Water Services Limited's allotments. It registered a charge (164823500001) created on 13 November 2025 and filed on 18 November 2025, and a statement of satisfaction of that charge in full was filed on 3 July 2026. A later return of allotment (SH01), signed for Alter Domus (UK) Limited, reports an allotment of 20,345 ordinary shares of £1 each, after which 101,725 ordinary shares of a single class were in issue, ranking equally for voting, dividends and distributions on a winding-up. The filing history dates this allotment to 12 August 2026 (statement of capital GBP 101,725.00, filed 21 August 2026) and records another allotment on the same day that took the capital to GBP 81,380. The form does not name the subscriber. ^{5 1 6}

analysisSouthern Water's annual report for 2025–26, approved on 15 July 2026, includes no material uncertainty on going concern. It states that a material uncertainty had been reported in the interim report for the six months to 30 September 2025 (the SW (Finance) I PLC report adds that SWS's 2024–25 accounts also contained one), relating to the possibility of a downgrade below investment grade by a second rating agency, and that it had been addressed by £0.9 billion of equity received and a further £0.3 billion commitment received on 22 June 2026; a simpler holding structure with less holding-company debt; a lower mark-to-market value of derivatives; new revenue allowances supplemented by the Competition and Markets Authority's redetermination published on 10 March 2026; the removal from the company's debt documentation of the event of default for not holding two investment-grade ratings; and £1.5 billion of additional debt with terms of five to eight and a half years. The report states that, as a result of changes to the Common Terms Agreement implemented in October 2025, the agreement no longer provides for a standalone event of default if two of Fitch, Moody's and S&P downgrade the Class A debt below investment grade. ^{1 2}

analysisRestrictions remained. The same report states that a credit-rating Trigger Event was continuing because at least two ratings were at or below BBB/Baa2, which prevents the company from paying dividends to its shareholders, and that the company expected to leave the debt-covenant Trigger Event when it submitted its compliance certificate to lenders at the end of July 2026. Deloitte LLP made going concern a key audit matter in its reports on the financial statements for the year ended 31 March 2026 of both Southern Water Services Limited (signed 15 July 2026) and SW (Finance) I PLC (signed 29 July 2026). It identified no material uncertainty but described the going-concern assessment for SWS as judgemental, resting on SWS keeping sufficient liquidity and covenant headroom and at least two investment-grade ratings when one of its three ratings was already below investment grade, and said that a downgrade by one of the other two agencies could, depending on the circumstances and Ofwat's response, result in a breach of the company's licence. ^{2 1}

analysisThe records give different figures for the holding-company debt dealt with in the restructuring. As summarised by the administrators, GHL's consultation letter of 12 March 2025 put the HoldCo notes at about £427m and the MidCo facilities at about £414m. The administrators' proposals state that £449m of principal was outstanding on the HoldCo loan-note facilities before their appointment and that the security trustee held security for lenders owed about £449m; their estimated outcome statement shows £401,000,000 due to the fixed-charge holder, while Appendix F shows 'Nil' against secured creditors. The 2025–26 annual report states that the restructuring included an agreement to reduce external holding-company debt by c.£450 million and to extend the maturities of the remaining debt of c.£415 million. The figures refer to different dates, instruments and measures (principal, creditor claims, amounts in an estimated outcome statement); none of the records reconciles them, and the secured-creditor line in Appendix F conflicts with the body of the same proposals. The annual report later states that the external loans issued by Southern Water (Greensands) Financing plc, shown among the 'Holdco' financing companies, were removed as part of the group restructuring during the year, and that the maturity dates of the loans of the 'Midco' financing companies were extended. ^{3 2}