Thames Water has secured court approval for a £3 billion debt package, which will provide the company with an initial £1.5 billion in cash and up to £1.5 billion more to see it through an appeal to increase bills by over 35%. The deal will allow Thames Water to avoid special administration, effectively a temporary nationalisation.
Thames Water has secured court backing for a £3 billion debt package, which will provide the company with an initial £1.5 billion in cash and up to £1.5 billion more to see it through an appeal to increase bills by more than 35%.
Thames Water is a British water and sewerage company that serves over 15 million customers across the Thames Valley region in England.
The company was privatized in 1989 and is now owned by a consortium of investors, including the Australian-based investment firm, Macquarie Group.
Thames Water operates one of the largest water distribution networks in the UK, with over 110,000 km of pipes serving homes, businesses, and industries.
According to recent statistics, Thames Water supplies approximately 2.6 billion liters of water per day.
The deal was approved at London‘s high court after four days of complex arguments over whether it should proceed. The agreement will allow Thames Water to avoid special administration, effectively a temporary nationalisation.
Thames Water, which serves 16 million customers and employs 8,000 people, has been on the brink of collapse for months due to debts of around £19 billion. The financial difficulties have led to underinvestment in pipes and drains, contributing to sewage overflows into rivers and seas.
The debt package will give Thames Water £1.5 billion in cash released monthly, plus up to £1.5 billion more to cover the costs of an appeal to increase bills by more than 35%. The company had argued that it would run out of money on March 24 if the emergency debt deal did not go through.
Thames Water will receive an initial £1.5 billion in cash, released monthly
Up to £1.5 billion more will be made available to cover the costs of an appeal to increase bills by more than 35%
The company will still need to raise billions of pounds of additional equity to repair its finances over the longer term
The court’s decision has been welcomed by Thames Water, which said it marked a significant milestone in the company’s efforts to strengthen its financial resilience. However, critics argue that the deal will not address the underlying issues with the company’s business model.
The Liberal Democrat MP Charlie Maynard was allowed to intervene in the case to argue that the interests of consumers would be better served by government control
Campaigners at We Own It have also expressed concerns about the deal, saying it will keep Thames Water afloat in the short term but does not address the company’s underlying business model.
The case has pitted two groups of existing creditors against each other, with the successful group holding almost £12 billion of class A debt and including investors such as Abrdn and Insight Investment. The smaller group, holding class B debt, was unsuccessful in its bid to block the deal.
A spokesperson for Ofwat said the regulator continues to engage with Thames Water on ensuring it delivers for customers as its recapitalisation process moves forward.
- theguardian.com | Thames Water wins court backing for £3bn debt package
- www.creditstrategy.co.uk | Thames Water wins court backing for emergency debt package
