Thames Water will be restructured, a High Court judge has ruled, with the company set to run out of money by the end of March.
England’s largest water company will see an injection of up to £3billion that should keep it afloat for at least another few months and could allow it to ward off nationalisation.
London’s High Court said on Tuesday that the deal - known as the company plan - could proceed, following four days of debates on whether it should go ahead.
The deal will give Thames Water Utilities Holdings Limited (TWUH), £1.5billion in upfront cash.
Thames Water has won court backing for a debt package
PAIt will then receive £1.5billion more to see it through an appeal to try to increase bills by more than the 35 per cent permitted Ofwat - the industry regulator for England and Wales.
"We believe it is the only implementable solution to enable the equity investment required to provide stability and certainty in the longer term and will not impact customer bills," Julian Gething, Chief Restructuring Officer said.
Existing investors have previously declared that the business, which is £19billion in debt, is "uninvestable".
Thames Water, which has 16 million customers and 8,000 employees, has been on the verge of collapse for months.
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Thames Water has 16 million customers and 8,000 employees
PAThe company argued in court that it would run out of money on March 24 if the emergency debt deal did not go ahead.
Adrian Montague, the chair of Thames Water’s board, said: "The court’s approval of the company plan marks a significant milestone for Thames Water, enabling us to proceed with the implementation of the liquidity extension transaction.
"Its implementation is a key step in strengthening our long-term financial resilience and will allow us to continue progressing the equity raise process and a holistic recapitalisation transaction as well as complete the CMA appeal process. Critically, it enables the management team to continue progressing the turnaround."
Thames Water still has to raise billions of pounds of additional equity to repair its finances over the longer term, with the £3billion only giving it enough money to run until September.
London’s High Court said on Tuesday that the deal - known as the company plan - could proceed
Wikimedia CommonsA smaller group of secondary creditors proposed an alternative plan known as the "B plan", which the court heard would provide the company with the same funding but on better terms and should be adopted instead.
In a judgment today, Mr Justice Leech ruled that the "relevant alternative" to the company plan being approved was SAR, and said: "After taking into account the public interest in ensuring the uninterrupted provision of vital public services, I nevertheless exercise my discretion to sanction the plan."
A hearing before the same judge, dealing with consequential matters arising from the judgment, is set to begin later on Tuesday.
A hearing to consider whether the "B plan" can be put to creditors for approval could also be held on Wednesday.
