Some of Thames Water’s biggest lenders are considering easing repayment terms as the company fights for survival.
The step on the road to a potential restructuring comes as the UK’s biggest water supplier is scrambling to shore up its finances. It has said it has enough cash to keep its operations running until the end of May next year.
The company announced on Friday morning that it was seeking fresh repayment terms, confirming it had immediate access to only about £1.6bn.
“We have been engaging with financial stakeholder groups and their advisers since July 2024 and are assisting with information requests to enable financial stakeholder groups to better understand Thames Water’s business plan and future funding needs,” Thames said in a statement.
The talks include discussions with a group of about 90 of its creditors, representing roughly £10bn of its more than £15bn debt pile.
Lenders have considerable interest in finding a route for the company that might avoid their investments being wiped out or cut in value.
As a water supplier, should Thames run out of money it may be placed in a form of temporary nationalisation, known as the special administration regime. This is so that essential services for consumers are maintained while a long-term financial fix is found.
However, such a move would probably come at significant cost to the taxpayer as well as creating a political imperative to show private investors taking their share of the financial pain.
At present, the negotiations between a group of major lenders and Thames only cover temporary measures, such as extending the maturity of some of its bonds in an attempt to attract fresh investment, sources close to the discussions said.
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This may add to pressure on the water watchdog Ofwat’s final decision on how much bills may rise by in England and Wales, including Thames’s. This is now expected to be revealed in January next year.
On Thursday, a source close to Thames Water told the Guardian that the company had secured dates in the high court – which may prove necessary as a step to formally rewrite its agreements with lenders.
They added: “We’re looking into a range of options to extend our liquidity runway This includes delaying when some money is due back to lenders.”