CK Infrastructure, part of the CK Hutchison group, put forward the non-binding offer earlier this month, but expects the utility's bondholders to take significant writedowns, according to two people close to the issue.
The news came after a UK court on Tuesday approved a GBP 3 billion emergency loan for Thames Water, offering it a lifeline as it buckles under a mountain of debt.
The loan provides a short-term solution to keeping the company -- faced with debts of GBP 16 billion -- afloat while it finds the necessary funding to stave off a costly public bailout.
Thames Water did not comment on the FT report when asked by AFP.
If the company that serves 16 million customers, or a quarter of the UK's population, fails to find the funding, it will have to call on the state to bail it out.
Such a rescue would be a blow to the government in the face of tight public finances.
Thames Water -- owned by a consortium of shareholders including Canada's Ontario Municipal Employees Retirement System and the British Universities Superannuation Scheme -- has recently attracted interest from private buyers.
Infrastructure investor Covalis Capital proposed an upfront buyout offer of GBP 1 billion, with the potential to bring in French utility giant Suez.
According to the Financial Times, Thames Water has also received other offers including a GBP 4 billion bid from American investment fund KKR.
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