Thames Water’s restructuring plans have been approved by the High Court, giving the beleagured utility a lifeline to avoid temporary nationalisation.
The UK’s biggest water supplier had been set to run out of money by 24 March without a £3bn loan from its creditors, amid debts of more than £19bn. Such an outcome would have almost certainly resulted in the company being placed in a special administrative regime (SAR)
“This is good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment,” Chris Weston, Thames Water chief executive, told markets in a statement on Monday.
“Importantly, this decision will support the delivery of our turnaround which is underway.”
The High Court decision means Thames will receive up to £3bn in “super senior” funding, including an initial tranche of £1.5bn to extend liquidity until September 2025.
It will then receive a further £1.5bn across two tranches of £750m to keep it going until May 2025.
Critics argue Thames Water’s nationalisation would have enabled its unsustainable finances to be restructured in the public interest. The company serves some 16m customers and 8,000 employees across the UK.
It has sought significant bill hikes in recent months, even appealing to the Competition and Markets Authority (CMA) last year to re-asses Ofwat’s price determination.
The financing from its top-tier bondholders, which include US hedge funds such as Elliot Management, comes at a steep 9.75 per cent annual interest.
A smaller group of secondary creditors had proposed an alternative arrangement known as the “B plan.”
In a judgment on Tuesday, Mr Justice Leech said the “relevant alternative” to Thames’ plan being approved was a special administration.
“After taking into account the public interest in ensuring the uninterrupted provision of vital public services, I nevertheless exercise my discretion to sanction the plan.”
More to follow.