Thames Water creditors vote on £2.4bn emergency loan as cash runs low
Creditors of Thames Water are due to vote on Thursday, 29 October, on whether to increase the company's funding facility by £2.4bn, to £5.4bn, which would keep it operating until autumn 2027, The Guardian reported. A funding facility is an agreed pot of money a company can draw on, and the increase would take the form of loans and bonds, Thames Water said.
The company, which serves 16 million customers in London and the Thames Valley, has a debt pile of about £20bn. Its shareholders walked away in 2024, leaving it under the effective control of its creditors, the lenders and bondholders it owes money to. The body casting the vote, London & Valley Water, is a consortium of those creditors.
The company has said it needs the extra money because it would run out of cash by the end of 2026 or the start of 2027, before it can reach a longer-term deal to restructure its debt. The creditors who would vote include BlackRock, Elliott Management and Silver Point Capital, the group known as class A creditors. Last year, the class A creditors granted the company a £3bn loan at an interest rate of 9.75%.
The request is one of a series. Thames Water and its affiliated issuer launched a sixteenth set of consent requests, which are formal asks for creditors to approve changes to existing agreements. Creditors have approved the company's previous 15 requests. This round asks them to vote on changes to the rules governing the facility's increase and to waive outstanding conditions.
Thames Water has also won majority support among key class B creditors for its recapitalisation, a reshaping of its finances, according to Reuters. Separately, the company and its creditors offered the investment firm Pimco a compromise on new debt in October, Bloomberg reported. Bloomberg also reported that the vote could be concluded before 29 October if the required majority of creditors approve early.
Credit ratings are another strand. Reuters reported that S&P has pushed Thames Water's ratings deeper into junk territory, the term for debt judged to carry higher risk of not being repaid, as the company works through its debt restructuring.
The cost to customers is also disputed in terms of how it would be paid. The campaign group We Own It estimated that the £2.4bn loan, if granted on the same terms and added to household bills, would cost £40 per household in interest alone.
