Thames Water wins court approval for £3billion emergency loan

Thames Water has won court approval for a £3billion emergency debt package to help it swerve effective nationalisation.

A High Court case in December 2024 gave Thames Water permission for debt restructuring and the deal was sanctioned today (Tuesday).

Britain’s biggest water company – which provides water services in Maidenhead, Slough and Windsor – argued in court it would have run out of cash by March 24 without its proposed restructuring plan.

This lifeline will allow Thames Water, which provides for 24 per cent of the population, to avoid special administration after being plunged into crisis last year with £17billion in debt.

The stricken utility company will get £1.5billion in cash, released monthly, in order to continue operating until September.

The extra £1.5billion is to extend liquidity until May 2026, and follows Thames Water’s announcement on Friday that it will appeal to the Competition and Markets Authority over a regulatory ruling on how much it can increase customers' bills.

Regulator Ofwat has capped bill increases at 35 per cent until 2030, but Thames Water says this 'does not appropriately support the investment and improvement that is required for Thames Water to deliver for its customers, communities and the
environment for the next five years'.

It had requested a 53 per cent increase.

Thames Water CEO Chris Weston said: “We are pleased the court sanctioned the company plan.

"This is good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment. Importantly, this decision will support the delivery of our turnaround which is underway.”

The conflict in court was between senior creditors and lower-ranked ones, who felt their alternative plan offered cheaper options for generating cash flow.

Nonetheless, the senior group came out on top and Thames Water said it has progressed towards a ‘more holistic recapitalisation transaction’ with some creditors.

The transaction will see the maturities of all Class A and Class B debts extended by two years, and Thames Water said it has received proposals from unnamed parties and is assessing each bid in detail to raise the equity to repair its finances.

In his approved judgment, Mr Justice Leech wrote he was giving Thames Water ‘an opportunity to finish the jigsaw’ before imposing special administration.

The judge described the £210million of legal and adviser fees as ‘eye-watering’ and said the company and its advisers ‘do not appear to have had any real concerns about the optics’ as the total bill for restructuring could reach £800million.

He wrote: “[Thames Water] is a public utility funded by the water bills of the residents and commuters of London and the South East who cannot do without the water supply.

“Customers and residents who are struggling with their bills will be horrified at these costs and mystified how the Thames Water Group has been able to fund them or why it has agreed to do so.”

Responding to the High Court’s decision to approve Thames Water’s £3bn rescue plan, Charles Watson, the chair and founder of river pollution campaign group River Action UK, said: “The Government cannot stand by and allow this reckless bailout to continue.

"It must step in, take back control of Thames Water, and put an end to years of environmental destruction and financial mismanagement – ahead of the even more expensive restructuring that Thames Water has planned."