Thames Water seeking approval of £3bn emergency restructure plan

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Professional Services Editor

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Charlie Maynard, MP for Witney, was among a group which included the utility's secondary creditors, who opposed a £3bn emergency loan agreement earlier this year.
Charlie Maynard, MP for Witney, was among a group which included the utility's secondary creditors, who opposed a £3bn emergency loan agreement earlier this year.

Embattled utilities giant Thames Water is at the High Court today seeking a judge’s approval of its £3bn emergency restructuring plan to avoid financial depletion by March.

The debt-laden water company launched a fundraising drive last October to help pay off some of its large cash pile after it was revealed it had just £500m left.

The hope behind the funding drive was that the new money would extend Thames’ ability to function until at least October 2025.

In a statement in November, ‘a class’ group of Thames Water’s bondholders revealed they had delivered an “executed and legally binding Backstop Agreement” for a debt facility.

The loan is being offered by existing ‘A class’ creditors who hold around £11bn of the more than £16bn of debt. Some of those institutions include Abrdn, Apollo Global Management, Assured Guaranty, Aviva Investments, BlackRock, Elliott Investment Management and Fidelity Investments.

Thames Water commissioned an independent expert report by Teneo to back its restructuring plan.

Among many factors, in order for a court to be satisfied with a plan, none of the members of the creditor class should be ‘worse off’ under the terms of the proposed plan.

The independent report claimed that no creditors would be worse off following the restructuring, however, a group of lower-ranked creditors disputed this finding. The group urged that a different plan should be pursued to provide cheaper liquidity to the company.

The water giant is set to be at a High Court hearing this morning, listed as a scheme of arrangement. This means a judge, Mr Justice Leech in this case, decides whether to approve a the restructuring plan.

The case is listed for a four-day trial as there are various witness statements and cross examinations needed to be heard due to the lower-ranked creditors dispute.

Once the case wraps up on Thursday it is expected that the judge will issue his judgment.

However, if the court doesn’t agree with the restructuring plan, then it is expected Thames Water will run out of money in March.