UK’s Thames Water starts process to unlock £823 million of new debt

[LONDON] Thames Water, Britain’s biggest water supplier, said its creditors had agreed to start a process to lend it a further £823 million (S$1.4 billion), as work continues on a long-term plan to secure its financial survival.

The company, which supplies to 16 million customers, has become a symbol of the sector’s failure, facing criticism over sewage pollution while wrestling with nearly £20 billion of debt. It has spent three years fighting to avoid nationalisation.

A last-ditch proposal by a group of senior creditors to write off £7.5 billion of debt remains on the table, but talks with the government and regulators on the terms of the deal are taking longer than expected.

In the meantime, creditors on Thursday (Feb 12) agreed to begin the process of providing extra funding even though the debt write-off deal has not been finalised, one of the conditions for further lending.

“Thames Water Utilities continues to work closely with stakeholders to secure a market-led solution, and following consultation with its creditors, hereby announces that the Super Senior Issuer will today launch a process to allocate about £823 million,” the group said in a statement.

The company has already drawn £1.4 billion from an initial £1.5 billion super-senior liquidity facility. Under a plan to keep it afloat while it works on a longer-term solution, it has the option to draw another £1.5 billion in two tranches.

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If a long-term restructuring agreement cannot be reached, Thames Water is expected to end up in the government’s special administration regime, a form of temporary nationalisation. REUTERS