Thames Water, whose future is at stake, has revealed that it is trying to buy more time by rewriting its loan agreements with lenders. Sources claim that the troubled water company is trying to extend its “liquidity flight” after admitting to only having enough cash to run operations for 8 months.
As part of its efforts to avoid a temporary renationalisation, the struggling water company booked court dates in November for a possible court approval to modify repayment terms. Thames Water, the company that supplies 16 million customers in London, and the Thames Valley region, has announced it will be out of cash by the end May of next year.
Thames is battling to raise billions in new funding to avoid being taken over by the government under a special administrative regime. Sources said that Thames, which has eight months of cash remaining, is in discussions with its creditors to delay repayments.
A source close to the firm said, “We are looking at a variety of options to increase our liquidity runway.” This includes delaying the time when money is due to be returned to lenders.
Sources have not specified a time frame for any extension of the repayment deadlines approved by the court, but they said that it would last at least until the water regulator, Ofwat makes a final decision about how much Thames can raise its bills in the next five-year period.
Ofwat will make a decision in December or early January on the five-year plans of all English and Welsh water companies, suggesting any extension to repayments may be as long as autumn 2025. Water companies could then appeal.
The Competition and Markets Authority ruled in favour of the water companies eight months after Ofwat made its final decision.
The high court can be required to rubber-stamp a deal that changes the terms of Thames agreements, i.e. a debt restructuring. This is especially true if certain creditors oppose the overall agreement. Sky News was the first to report on the reservation of court dates.
The court dates can be used to negotiate a variety of restructuring agreements depending on the outcome of negotiations between a company and its creditors.
Ofwat has placed the water company, which was privatised in 1989 with a dowry provided by the British government, into Special Measures to allow for greater scrutiny of its operation
Ofwat has allowed a 22% increase, while Thames requested a 59% increase. Thames has asked for a 59% rise, but Ofwat only allows a 22% increase – which is equivalent to an increase from £99 to £535 in 2030.
Thames Water has declined to comment.
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