Thames Water restructuring approved, averting financial crisis

Plans to restructure Thames Water, which was set to run out of money by the end of March, have been approved by a High Court judge.

Thames Water chairman Sir Adrian Montague has said the approval of a £3 billion rescue loan for the company by a High Court judge "marks a significant milestone".

He said: "[It's] a key step in strengthening our long-term financial resilience. Critically, it enables the management team to continue progressing the turnaround."

Thames Water Group's (TWG) parent company, Thames Water Utilities Holdings Limited (TWUH), is in around £16 billion of debt and needs £3.3 billion over the next five years to keep running.

Earlier this month, Mr Justice Leech heard several days of arguments over a restructuring plan, known as the “company plan”, which, if approved, would provide a loan of up to £3 billion with a 9.75% interest rate.

Thames Water restructuring has been approved by a judge. (Image: Getty)

TWUH’s lawyers claimed the company would enter special administration (SAR) if the plan was not approved, but a smaller group of secondary creditors proposed an alternative plan known as the “B plan”, which the court heard would provide the company with the same funding but on better terms and should be adopted instead.

In a judgment on Tuesday, Mr Justice Leech ruled that the “relevant alternative” to the company plan being approved was SAR, and said: “After taking into account the public interest in ensuring the uninterrupted provision of vital public services, I nevertheless exercise my discretion to sanction the plan.”

Thames Water CEO Chris Weston added: "[It's] good news for our customers, puts our business on a firmer financial footing and enables us to continue to invest in our network and deliver critical infrastructure upgrades for our customers and the environment."