Plans to restructure Thames Water have been approved by a High Court Judge, just weeks before the struggling utility was set to run out of money.
Thames Water Utilities Holdings Limited (TWUH) is in around £16 billion of debt and needs £3.3 billion over the next five years to keep it afloat.
TWUH is the parent company of Thames Water Group (TWG) – England’s biggest water company with about 16 million customers.
Earlier this month, Mr Justice Leech heard several days of arguments over a restructuring plan, known as the ‘company plan’, which, if approved, would provide a loan of up to £3 billion with a 9.75% interest rate.
TWUH’s lawyers claimed the company would enter special administration (SAR) if the plan was not approved, but a smaller group of secondary creditors proposed an alternative plan known as the ‘B plan’.
The court heard the B plan would provide the company with the same funding but on better terms and should be adopted instead.
In a judgment today Mr Justice Leech ruled that the ‘relevant alternative’ to the company plan being approved was SAR.
He said: ‘After taking into account the public interest in ensuring the uninterrupted provision of vital public services, I nevertheless exercise my discretion to sanction the plan.’
Thames Water Utilities Holdings Limited (TWUH), the parent company of Thames Water Group (TWG), England’s biggest water company with about 16 million customers, is in around £16 billion of debt and needs £3.3 billion over the next five years to keep running
Thames Water Chief Executive Officer Chris Weston (pictured) said: It is ‘good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment’
A hearing before the same judge, dealing with consequential matters arising from the judgment, is set to begin later on Tuesday.
A hearing to consider whether the ‘B plan’ can be put to creditors for approval could also be held on Wednesday.
Thames Water chairman Sir Adrian Montague has said the approval of a £3 billion rescue loan for the company by a High Court judge ‘marks a significant milestone’.
He said it is ‘a key step in strengthening our long-term financial resilience’.
‘Critically, it enables the management team to continue progressing the turnaround,’ he added.
Chief executive Chris Weston said it is ‘good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment.’
This is a breaking news story more to follow.
