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Thames Water has received court approval for a controversial £3bn loan from creditors including the hedge fund Elliott Management, which should enable the UK’s largest water utility to stave off immediate renationalisation.
A group of junior creditors, which stood to make substantial losses under the deal, had challenged the loan agreement in London’s Court of Appeal in a hearing that concluded last week.
But judges ruled that the deal can go ahead with only a small amendment to releases freeing directors from future litigation.
The decision should allow the heavily indebted utility access to fresh funds while it tries to raise equity to shore up its longer-term finances. The decision could, however, be subject to a further appeal at the Supreme Court.
Chris Weston, chief executive of Thames Water, said on Monday that the company remained of the view that a “market led solution” was in the “best interest of customers, UK taxpayers and the wider economy.”
Environmental campaigners, led by the Liberal Democrat MP Charlie Maynard, had opposed the plan in court, arguing that it was in the public interest for the utility to be renationalised under the government’s special administration regime.
Opponents are concerned about the interest rate of 9.75 per cent, plus other fees, which in total could cost Thames Water more than £800mn. The company is already paying out at least £15mn a month in fees to advisers, lawyers and consultants.
This is a developing story
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