The rival investors had offered Thames £1.5bn with an 8pc interest rate. A spokesman for the group suggested the £3bn loan carried a “predatory lending rate”.
Thames has said it looked at the alternative proposal and concluded that it could not be completed in the short time it had to strike a deal.
The group of Class A creditors that drew up the emergency funding plan is made up of more than 100 global investment firms, including US hedge fund Elliott Investment Management and investment firms Apollo Global Management and Silver Point Capital.
If approved at a court date in December, the creditors will drip-feed monthly payments to Thames, subject to certain conditions being met.
The lifeline staves off the immediate threat of nationalisation and will allow Thames to keep seeking new investment to support the utility company in the long term.
Chris Weston, Thames Water’s chief executive, is trying to raise £3.3bn of fresh equity. A failure to raise fresh investment would make nationalisation almost inevitable as Thames struggles under the weight of a £16bn debt pile.
Thames is at serious risk of being taken into the Government’s special administration regime (SAR), a process that would allow it to continue providing essential services whilst being in administration. The cost to the taxpayer of such an outcome has been estimated at £10bn over five years, although it is not clear how long Thames would remain in the SAR.