Thames Water will seek court approval for up to £3bn in emergency funding, which could stave off temporary nationalisation, at a court hearing in London.
A high court judge will hear from Britain’s biggest water supplier and groups of rival creditors on Monday before deciding whether to approve the rescue. Without the debt lifeline, Thames Water has said it could run out of cash by March.
Under English insolvency law, a judge must rule on such cases. The hearing is expected to last four days.
Last month, Thames was granted approval to seek the £3bn cash loan, which the troubled company said was crucial to ensure it had enough money to stave off temporary nationalisation.
Thames Water, which has £17bn worth of debt, is at the centre of a public backlash against Britain’s privatised water industry, which has increasingly polluted rivers and seas with sewage, amid accusations that profit has been prioritised over the environment.
Thames has said it is confident its plan will succeed as it has the backing of creditors holding more than 90% of its secured debt, despite opposition from a group of lower-ranked creditors.
Under the proposals, Thames would get access to additional funding, cash reserves and debt extensions, giving it breathing space to secure its survival in the long term by raising £3.25bn in new equity alongside a debt restructuring.
The lower-ranked creditors say the plan benefits the senior creditors unfairly and that its 9.75% interest rate makes it too costly. They have proposed their own package.
The judge must decide whether the dissenting creditors would be no worse off in the most likely alternative to the plan, which Thames Water says is that the company is placed in special administration – though that is hotly disputed.
