Thames Water confident over £3bn funding lifeline
Thames Water signals progress in its efforts to stay afloat but the water firm still has to win over investors in the face of regulatory opposition to its bill-raising plans.
Crisis-hit Thames Water says it has received enough support from its creditors to potentially secure up to £3bn in emergency funding.
The UK’s biggest water firm revealed that those holding more than 75% of its less risky debt had agreed to the staged funding, saying that the deal should tide it over until at least October 2025.
The support of at least three quarters of the so-called Class A bondholders, who hold £12bn of the utility’s massive debt pile, is crucial for a court to approve the deal.
The plan is slated to go before a judge on 17 December.
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It would see Thames Water initially get £1.5bn at an annual interest rate of 9.75%.
An additional £1.5bn is conditional.
It would require Thames to appeal the industry regulator Ofwat’s determination on how much it can raise customer bills over the next five years.
A decision by the watchdog is expected in early December.
The intital funding would give the company some breathing space in its battle to avoid collapse.
Such a prospect would leave the business in taxpayer control under a so-called special administration procedure.
Its investors described Thames as “uninvestible” after Ofwat published its initial verdict on water firms’ business plans.
Thames has since sought a 53% hike to customer bills by 2029/30, according to Ofwat’s figures.
It would make them the most expensive water bills in the country.
The company said the vote threshold marked “an important milestone” in implementing the liquidity extension it had been seeking, adding that a process was continuing that would allow further creditors to participate.
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Thames added that early voting suggested that consent levels would be achieved for a separate proposal that would permit the use of restricted cash in its reserve accounts.
A spokesperson for the creditor group said of its support for the emergency funding: “It shows that there is a genuine will to develop a market-based solution which saves UK taxpayers from shouldering the costs of special administration.
“Our group is working intensively with the company and providing it with the resources and turnaround expertise it needs to ultimately attract strategic equity and rebuild.”
