However, as part of the deal, the debt-laden business will be hit with a “predatory” interest bill that will enrich investors, according to a spokesman for a rival group of investors.
The agreement struck on Friday is between Thames Water and a group of senior creditors, although Chris Weston, the chief executive, refused to confirm the identity of its backers.
It is understood that the group includes US hedge funds such as Elliott and BlackRock, as well as UK infrastructure investors such as Abrdn.
Bosses announced the proposed cash injection despite receiving a cheaper proposal from the set of rival investors, which had offered Thames £1.5bn with an 8pc interest rate – as opposed to the 9.75pc agreed with the senior creditors.
The decision to plough ahead with more expensive debt has sparked a bitter clash between the senior and junior creditor groups in Thames.
Each cohort of creditors has instructed teams of separate City lawyers.
A spokesman for the junior creditors said: “Thames Water is attempting to lock itself into an extremely costly short-term loan and ignoring more affordable offers of financing it has received.
“While it’s being positioned as solving the company’s problems, in the long term the opposite is true.
“The predatory lending rates, lender fees, and conditions being levied will see the company spiral into greater financial and operational trouble and block off the potential for a fair, transparent market-based equity raise, open to all interested investors.”
In its announcement on Friday, Thames said the cash injection from its senior creditors will involve an initial £1.5bn payment, with the capacity for a further £1.5 split across two tranches.
However, the latter is dependent on the business making an appeal to the Competition and Market Authority over its ability to raise bills by more than 50pc.
If approved at a court date in December, the creditors will drip-feed monthly payments into the business subject to certain conditions being met.
While staving off the threat of nationalisation, Mr Weston said the cash injection will also allow it to keep seeking new investment to keep the business afloat in the long term.