Thames Water: Challenge to £3bn emergency loan dismissed by Court of Appeal
An appeal against a £3bn rescue package for Thames Water has been dismissed following a three-day hearing last week.
The Court of Appeal’s ruling on Monday averts the possibility of the UK’s biggest water supplier being placed into special administration (SAR).
But critics argue the £3bn emergency loan from a group of Class A creditors is only a short-term fix for the troubles at Thames Water and a SAR is in the public interest.
Thames Water has amassed debts of more than £19bn and is under pressure to upgrade creaking infrastructure and reduce sewage leaks.
A group of Thames Water’s Class B creditors and the Liberal Democrat MP, Charlie Maynard, appealed against the High Court’s prior decision at a three-day hearing last week.
The full details of the court’s reasons for the dismissal are set to be published at a later date.
Andrew Thornton KC previously told the court the terms of the agreement were “mispriced and inappropriate” and were “designed by senior lenders for the benefit of senior lenders.”
Thames Water’s parent company, TWUH, and its Class A creditors had challenged the appeal.
Responding to the judgement, Thames Water chief executive Chris Weston said: “We are pleased that the Court of Appeal has today decisively refused the appeals and upheld the strong High Court decision to sanction the Company Plan.
“We remain focused on putting Thames Water onto a more stable financial foundation as we seek a long-term solution to our financial resilience.
“Today’s news demonstrates further progress.”
A spokesperson for the group of Class A creditors said: “The decision from the Court is clear and we hope this brings to an end the ongoing legal distractions so all parties can focus all efforts on securing billions in fresh equity and new long-term ownership for Thames Water.
“A market-based solution is the best route to achieving financial sustainability for the company in the coming months and will deliver the complex operational turnaround, improved service and environmental outcomes customers rightly expect and deserve.”
A statement from the Class B creditors said that the group was considering an appeal to the Supreme Court “to ensure that customers and the broader public are not forced to bear the costs of a deeply flawed restructuring process.”
Charlie Maynard MP said: “Thames Water remains a cash cow for its lenders, while its 16m customers are left to foot the bill for the company’s ludicrously expensive interest charges and advisory fees.
“It is in the government’s power to end this now for the benefit of the British public and seek to put the company into special administration.
“We must not stand back and allow Thames Water’s lenders to keep lining their pockets at the expense of customers and the environment while our regulators sit on their hands and the company pumps gallons of sewage into our rivers, neglects basic repairs and hikes up customers’ bills.”
A government spokesperson said: “The company remains stable and the government is closely monitoring the situation. It would be inappropriate to comment further on the financial matters of a private company.”