Thames Water will request the approval of the High Court for a rescue plan of 3 billion pounds sterling during a four -day hearing from the Royal Courts of Justice on Monday.
The indebted utility requests the approval of a judge for a restructuring plan centered on an emergency loan, he says that he must avoid missing money by the end of March.
The loan is offered by existing “class” creditors who contain approximately 11 billion pounds sterling of more than 16 billion pounds sterling of debt accumulated by Thames water Utility Holdings, the regulated operating company, which serves more than 15 million customers in London and Southeast.
The company will affirm that without the approval of the court for the agreement, it will be forced to conclude a special administration regime (SAR), supervised by the government at the expense of taxpayers.
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Water activists criticized the loan conditions, which is offered at an interest rate of 9.75% over two and a half years with up to 100 million pounds additional in charge fees, and called Environment Secretary Steve Reed to block it and force the company in special administration.
The loan will also be granted to “super-senior” conditions, which means that it will be reimbursed first in the event of administration, and existing creditors will have two-year reimbursement dates.
It will be opposed to a group of class B creditors, who hold about £ 750,000 of more junior debts and are faced with a restructuring.
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The hearing by the court intervenes while the Thames Water decides to call on the terms of a final decision of the OFN water regulator, which allowed the company to increase invoices by more than 30 % compared to April.
The Thames had requested invoice increases of more than 50% to finance its operations and planned investments in new and improved infrastructure over the next five years. It is not yet clear if the Thames believes that the determination of the offer makes it an investable proposal.
Sources close to the process told Sky News that there was “a lot of uncertainty” on the final determination of the offer and if it can support the reversal of the company.
The loan of 3 billion pounds sterling, given in two tranches, is required to bring the company on the other side of a call, which will be supervised by the competition authority and markets.
Mr. Reed, the secretary of the environment, previously declared that he was opposed to the nationalization of the Thames water and wanted a “market solution”, but it was reported that the government had approached Potential administrators to supervise an SAR if the company fails.
If the loan is approved, the Thames intends to continue a complete restructuring, involving new investments in shares and an exchange of debts for equity with existing creditors. Without this process, CEO Chris Weston described society as “useless”.
For the judge to approve a rescue plan, he must have the 75% agreement of creditors. Thames says he has more than 90% approval. Failing that he should consider the impact of a “relevant alternative”, a plan that leaves creditors either worse.