Thames Water given £3bn debt lifeline by High Court

Thames Water has won approval to borrow £3bn to prevent its imminent collapse, in a high-cost loan deal described by a judge as “eye-watering”.

- TARA COBHM

The High Court ruled yesterday that the firm could press on with a crucial cash injection, even as some of its creditors and a Liberal Democrat MP said they would appeal against the decision. Mr Justice Leech approved the appeal.

Campaigners described the bailout as a scandal for customers and the environment. Thames Water is England's biggest water firm and supplies about 16 million households across London and the South East.

Thames Water Utilities Holdings Limited (TWUH), the parent company of Thames Water Group, needs £3.3bn over the next five years to keep running as it faces roughly £16bn of debt. The company has been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses.

Earlier this month, Mr Justice Leech heard several days of arguments over whether to approve a restructuring plan, known as the “company plan”, which provides a loan of up to £3bn with a 9.75 per cent interest rate, with a view to enabling operations until next year.

TWUH’s lawyers claimed the company would enter special administration (SAR) if the plan was not approved, but a 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 yesterday, 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.”