Thames Water seeks High Court approval for emergency cash amid £17bn of debt
3 February 2025, 15:13
Thames Water will seek High Court approval for an emergency £3bn rescue plan on Monday in its latest bid to survive ongoing financial turmoil.
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The UK's biggest water and waste company, which currently has about £17bn worth of debt, is seeking a judge's approval for a restructuring plan in a four-day hearing beginning at the Royal Courts of Justice on Monday.
The plan is centred around the emergency loan of £3bn, which the company says it needs to avoid running out of cash by the end of March.
Failure to secure approval will raise the chances of a temporary nationalisation, which could cost the government some £2bn a year.
The company’s financial struggles emerged about 18 months ago and have been blamed on poor historical regulation, greedy shareholders, climate change and management failure.
Thames Water, which serves more than 15 million customers in London and the South East, is still considering whether to appeal against a decision by Ofwat over bill increases.
The water industry regulator decided to raise bills by 35% above inflation over the next five years – short of the 53% increase Thames Water applied for.
The £3bn loan offered by lenders would come in two instalments, with the first payment to get the company through to the autumn, and the second to be used if the company decides to appeal against Ofwat's bill rise.
The company has until 18 February to launch an appeal to the Competition and Markets Authority (CMA).
Thames Water has been heavily criticised over its performance following a series of sewage discharges and leaks.
But regardless of what happens to the company in the future, water supplies to households will continue as normal.
The loan is being offered by existing "A class" creditors, who hold around £11bn of the debt racked up by the company.
Water campaigners have criticised the terms of the loan, which is being offered at an interest rate of 9.75% over two and a half years with up to a further £100m payable in fees.
They have called on Environment Secretary Steve Reed to block it and force the company into special administration.
Mr Reed has previously said he opposes the nationalisation of Thames Water and wants a "market solution", but it has been reported the government has approached potential administrators to oversee an Special Administration Regime should the company fail.
Barristers for Charlie Maynard, the Liberal Democrat MP for Witney in Oxfordshire, told the hearing on Monday: “The envisaged bridge finance aggravates rather than mitigates the Thames Water debt doom loop.
“It comes at (an) egregious cost; is likely to be exhausted mainly in payment towards Thames Water’s existing debt obligations, rather than being deployed in the business; and provides a bridge to nowhere.”
He continued: “The terms of the restructuring plan are a poor short-term fix and not financially sustainable in the mid or long term for Thames Water.”
