Thames Water is trying to buy time to avoid running out of funds by rewriting loan agreements with its lenders as its future hangs in the balance, it has emerged.
The troubled water company, which is struggling under £15bn of debts, is attempting to extend its “liquidity runway” after admitting it only has enough cash left to run its operations for eight months, sources have said.
The struggling water company has booked dates at the high court in November to potentially gain court approval to change repayment terms, as part of its wider effort to stave off falling into a form of temporary renationalisation.
Thames Water, which supplies 16 million customers across London and the Thames Valley, has said it will run out of money by the end of May next year.
Its fate is one of the biggest challenges facing the government as Thames battles to raise billions of pounds in fresh funding to avoid falling into government control under a special administration regime.
With eight months’ worth of cash left, Thames is in talks with its creditors in order to put off repayments on its debts, sources said.
“We’re looking into a range of options to extend our liquidity runway,” a source close to the company said. “This includes delaying when some money is due back to lenders.”
Sources did not specify a date for the length of any court-approved extension of repayment deadlines, but said it would be at least until after the water industry regulator, Ofwat, delivers a final decision on how much Thames is allowed to raise bills over the next five years.
Ofwat is due to make a decision on all English and Welsh water firms’ five-year plans in December or January, suggesting that any extension on repayments could be at least until autumn 2025. It could be followed by an appeal from water companies.
When Ofwat’s 2019 decision on the amount that could be raised from customers’ bills was challenged by the water companies, the Competition and Markets Authority’s ruling in their favour came about eight months after the regulator’s final ruling.
Changing the terms of Thames’s agreements – a restructuring of debts – can require a rubber stamp from the high court, particularly if some creditors are opposed to an overarching deal. The reservation of court dates was first reported by Sky News.
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The court dates could be used for a range of restructuring agreements, depending on where negotiations between the company and its lenders end up.
The water supplier, which was privatised with a dowry from the British state in 1989, has been placed into special measures by Ofwat to allow greater scrutiny of its operations
The company is at odds with Ofwat over the amount it can increase bills by. Thames has requested a 59% increase, while Ofwat has provisionally allowed for a 22% rise – equivalent to a £99 increase to £535 by 2030.
Thames Water declined to comment.