Thames Water urges high court to accept restructuring plan
Thames Water has urged the High Court to accept its £3bn restructuring plan in a bid to avoid renationalisation.
The company said today that over 75 per cent of creditors have backed the restructuring, and cited a new report claiming that no creditors will be worse off as a result of the plan.
In October, Thames Water launched a £3bn fundraising drive to keep it going into next year by bringing in various creditors, which has to be approved by a court.
The water company reported that it had just £500m in cash, and hoped the new money will extend its ability to function until at least October 2025.
Earlier this month, Thames Water commissioned an independent expert report to back a restructuring of its debt to the high court, and today released a supplemental report to further strengthen its case.
Following the release of the original report, Thames Water agreed to new terms with its bond holders, including break rights that kick in if the company is still rated at ‘junk bond’ status by 2028.
The supplemental report today claimed that no creditors would be worse off following the restructuring.
However, a group of lower-ranked creditors has disputed this, stating in court documents that a different plan should be pursued to provide cheaper liquidity to the company.
The group “does not consider that the high financing costs and entrenched control that the Class A creditors will have over any subsequent recapitalisation transaction, if the plan is sanctioned, is in the best interests of the group, its creditors or its customers,” it said in court documents seen by Reuters.
Earlier this week, it was revealed that Thames Water diverted millions of pounds it had pledged for environmental clean-ups towards funding bonuses and investor payouts.
Ofwat fined Thames £18m in December for breaking new rules on dividends that allows the regulator to take enforcement action against companies which fail to tie payouts to performance.