The UK’s largest water utility company, Thames Water, stands at a crucial juncture as it warns that British taxpayers could face an 18-month burden of funding the organisation if the High Court blocks its £3 billion refinancing strategy.
During Tuesday’s High Court proceedings, Thames Water presented arguments for securing bridging finance, which has received backing from most creditors. The company’s legal representative, Tom Smith KC, posed the stark choice facing the court: provide temporary liquidity or force an immediate closure.
The gravity of the situation stems from Thames Water’s mammoth £17 billion debt burden, despite serving nearly a quarter of the UK population and maintaining an extensive infrastructure network valued at £19.9 billion. The company’s shareholders have already declared it “uninvestible” and written off their investments.
Court documents reveal that without successful refinancing, Thames Water will exhaust its available liquidity by 24 March 2025. The proposed rescue package includes £1.5 billion in new “super senior” debt, with provisions for an additional £1.5 billion, plus two-year extensions on existing debt maturities.
The timing proves particularly critical as Ofwat prepares to announce its price determination for 2025-2030 this Thursday. Thames Water’s rescue plan hinges significantly on this ruling, as the company seeks approval for bill increases of up to 59 per cent over the next five years.
Should the refinancing fail, Thames Water could enter special administration as early as 1 February, requiring state support until at least July 2026. This outcome would effectively wipe out all existing economic interests in the company while maintaining essential operations.
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