Struggling Thames Water today revealed plans for a “stay of execution” through raising an extra £3 billion in emergency funding from creditors that will give it financial stability through to October next year.
Britain’s biggest water supplier had faced running out of money by May when it would have been forced into a special administration arrangement – effectively a nationalisation – that would have been one of Britain’s biggest ever corporate insolvencies.
But today bosses said its new lifeline proposals will “enable us to continue with the planned investment and maintenance of our infrastructure in order to continue to meet customers’ needs, and our environmental responsibilities.”
Thames has more than £15 billion in debts and has been in urgent talks with lenders and shareholders about putting its finances on a more secure footing.
It said its liquidity would be guaranteed for at least the next 12 months and potentially through to May 2026 if Thames makes an appeal to the competition watchdog, the CMA, over its draft price determination from regulator Ofwat, which it insists makes the company “uninvestible.”
Chairman Sir Adrian Montague said: “The Board and leadership team remain focused on stabilising the business and today’s announcement is an important step in the process to increase its long-term financial resilience.
“There will be further stages and we will continue to work collaboratively with our many stakeholders as we look to attract new equity into the business and seek a final determination that enables the delivery of our ambitious business plan for the next five years.”
CEO Chris Weston said: “Today’s news demonstrates further progress to put Thames Water onto a more stable financial footing as we seek a long-term solution to our financial resilience. This step forward comes on top of our performance improvements which were recently recognised by Ofwat.
“We are working closely with and have the support of our creditors, enabling Thames to continue to implement our turnaround plan so that we can deliver better results for our customers and the environment whilst seeking to attract new capital into the business.
“In the meantime, our teams on the ground continue to supply our services to our 16 million customers every day.”
The complex arrangements involve Thames receiving an initial tranche of £1.5 billion upfront from certain creditors with capacity for a further £1.5 billion in two tranches of £750 million if Thames Water makes an appeal to the CMA.
The funding will be released to TWUL on a monthly, or on an interim basis with a maturity date of 2.5 years and a coupon of 9.75%. In addition the maturities of all existing Class A Debt and Class B Debt will be extended by two years.
