Blitz Bureau
THAMES Water has secured court approval for a 3 billion pound ($3.8 billion) debt lifeline, warding off the collapse and state rescue of the country’s biggest water supplier, according to Reuters.
The Government had been on standby to put Thames Water, water and waste company, which is struggling with 18 billion pounds of debt, into special administration, a form of temporary nationalisation to keep it operating if it goes bust. The lifeline, provided by senior creditors, will give Thames 1.5 billion pounds plus a possible further 1.5 billion, extending its funding until May 2026. Without the approval, it had said it would have run out of cash in six weeks.
Calling the decision a “significant milestone”, Thames Water said that would allow it to pursue its attempt to obtain new equity.
However, a group of lower-ranked creditors opposed it, calling its 9.75 per cent interest rate too costly. In his written ruling, Judge Thomas Leech said that the most likely alternative to the plan was Thames being put into special administration, rather than the successful implementation of the Class B creditors’ rival proposal. He said the plan was “not unfair” to the Class B creditors and it did not infringe competition law. He gave the junior creditors permission to appeal because of the importance of the case.
The junior creditors said they were confident they still had a case, given that the cost of the lifeline was “very, very high”, with more than half of the money going “round in a circle and back in the pockets” of the lenders as described by the judge.
“Having this judgement reviewed by the Court of Appeal is essential against the backdrop of predatory lending to an essential utility with a clear public interest,” a spokesperson said.
