Thames Water in talks with creditors over £3bn lifeline

Thames Water is approaching an agreement with a group of creditors over a financing package of up to £3 billion as the embattled water supplier races to restructure its debt.
The group, which comprises bondholders with hundreds of millions of higher-risk “B” notes, has put forward a rival plan to one proposed by holders of more senior ranking “A” bonds.
The creditors, which include large institutional investors and banks, are offering the UK’s biggest water supplier a new debt facility of between £1.5 billion and £3 billion, at an interest rate of 8 per cent, according to a report from Reuters.
The company has also been in talks with holders of £12 billion worth of A bonds over a potential £1 billion lifeline to give it time to restructure its debt.
The aim of the alternative plan is to give Thames extra liquidity and a stable platform to negotiate longer-term capital from investors, according to the report. The group of lower-ranked creditors hopes that by imposing fewer restrictions on the company, the proposal will look more appealing.
Thames declined to comment.
Thames Water serves 16 million households in London and the southeast. It is owned by a web of parent companies in a complex structure set up by its former owner Macquarie, an Australian infrastructure investor.
The company has been in talks with lenders over a restructuring of its £16 billion debt pile after warning last month that it was likely to run out of money by the end of the year if it could not secure additional liquidity.
The ratings agencies Moody’s and Standard & Poor downgraded the water company’s credit rating by five rungs to the equivalent of CCC+, a rating that means a business is extremely risky and on the edge of failure.
S&P said that Thames was grappling with “near-term liquidity stress”. Moody’s said its access to funds was “significantly tighter than previously expected”.
Without a clear rescue plan, the government or Ofwat, the water industry regulator, could place Thames Water in a so-called special administration regime, in effect a renationalisation.