Crisis-hit Thames Water says it has received enough support from its creditors to potentially secure up to £3 billion in emergency funding.
The UK’s largest water company has revealed that those holding more than 75% of its least risky debt have agreed to staged funding, saying the deal is expected to last until at least October 2025.
Support from at least three-quarters of Class A bondholders, who hold £12bn of the utility’s huge debt, is crucial for a court to approve the deal.
The project should be presented before a judge on December 17.
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This would see Thames water get £1.5 billion initially at an annual interest rate of 9.75%.
An additional £1.5 billion is conditional.
It would force Thames to appeal a decision by industry regulator Ofwat on how much it can increase its customers’ bills over the next five years.
A decision from the regulator is expected in early December.
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The initial funding would give the company some breathing room in its fight to avoid collapse.
Such a prospect would leave the company under the control of taxpayers under a so-called special administration procedure.
Its investors branded Thames “uninvestable” after Ofwat published its initial verdict on the water companies’ business plans.
Thames has since targeted a 53% increase in its customers’ bills by 2029/30, according to Ofwat figures.
That would make them the most expensive water bills in the country.
The company said the voting threshold marked “an important step” in implementing the liquidity extension it was seeking, adding that a process was continuing that would allow other creditors to participate.
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Thames added that the early vote suggested consent levels would be reached for a separate proposal that would allow the use of restricted cash in its reserve accounts.
A spokesperson for the creditors’ group said of its support for the emergency funding: “This shows that there is a real desire to develop a market-based solution that saves UK taxpayers from bearing the costs of a special administration.
“Our group works intensively with the company and provides it with the resources and turnaround expertise it needs to ultimately attract strategic capital and rebuild.”