Thames Water: £3bn rescue plan proposed to save debt-riddled UK water firm from collapse
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The group, representing approximately 75% of Thames Water's class B bondholders, announced this morning (Friday 8 November) that they have submitted an "executed and legally binding Backstop Agreement" for a debt facility aimed at addressing the company's urgent funding requirements, as reported by City AM. The bondholders said: “The B Group promised Thames Water it would deliver a fully funded commitment, and it has now done exactly that very rapidly and in full”.
This new debt offer is intended to outdo a more expensive alternative from a set of class A creditors, including American hedge funds Elliott and Silverpoint. Thames has been grappling with a crisis since March when a faction of its shareholders deemed its business strategies unviable.
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Hide AdClass B debtholders reportedly believe that Thames Water could save hundreds of millions of pounds in interest payments and fees over the coming year if the company supports their proposal, according to Sky News. In August Thames Water was made to appoint an independent monitor and develop a “suitable” turnaround plan by regulator Ofwat after its credit rating was downgraded to “junk” by Moody’s.


Ofwat also hit the water company with a £104m fine related to its poor management of wastewater treatment works and wider sewer networks, including their operation of storm overflows. Ofwat said the firm “failed to ensure that discharges of untreated wastewater from storm overflows occur only in exceptional circumstances, which has resulted in harm to the environment and their customers”.
A spokesperson for Thames Water at the time said: “We take this matter very seriously and have cooperated at every stage of Ofwat’s investigation. We regard all untreated discharges as unacceptable, even when they are permitted, and are taking action to improve the health of our rivers as a key area of focus and investment.”
The water firm previously said it only has enough cash to continue operating until May 2025. It also has more than £15 billion of debt.
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Hide AdSir Adrian Montague, chairman of Thames Water, previously said: “The board and leadership team remain focused on stabilising the business. 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.”
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