Thames Water creditors back £3bn funding deal

Thames Water, the troubled utility company, has secured the backing of crucial creditors for a £3 billion lifeline financing deal as it battles to avoid renationalisation.
Britain’s largest water and sewerage group said that 75 per cent of its top-ranked class A creditors had agreed to the refinancing.
The plan would give Thames enough cash to keep operating until October next year after it warned this year that it could run out of money by the end of 2024.
The creditor group, which represents more than £12 billion of class A debt, said it was a “decisive vote of confidence” in the first stage of its plan.
The refinancing plan will need court approval.
Thames supplies water and wastewater to 16 million customers in London and the Thames Valley. It has fallen into financial crisis after years of recurring fines for pollution, leaks and poor service, during which its net debt has risen to £15.2 billion.
It has lost the confidence of the credit rating agencies and in March its nine international investors refused to inject more funds, calling Thames uninvestable, and wrote off their investments. This left the company on the brink of collapse and put the government on standby for nationalisation via a special administration regime.
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The funding proposal comprises an initial £1.5 billion, which will be released in January if the refinancing is approved. Thames will pay an annual interest of 9.75 per cent on the debt.
An additional £1.5 billion will be released if Thames appeals against a determination by Ofwat, the industry regulator, on how much it can raise customer bills, which is due in the next couple of months.
Thames has told Ofwat that it wants to increase average bills by almost 40 per cent to £608 in 2029-30 to fund improvements, including the treatment of wastewater. This was rejected by the regulator, which said it could increase bills by 23 per cent over the five years to 2030. It has yet to make a final ruling.
A lower-ranking group of Thames bondholders had called on the company to extend the deadline for creditors to agree to the financing deal after putting forward a rival offer.
Thames said the maturity date of its existing class A and B debt would be extended by two years. Interest payments on this debt would continue to be made.