The group of financial heavyweights offering Britain’s biggest water supplier a £1.5bn lifeline is calling on the company’s other backers to accept the plan in a last-ditch bid to save the utility.
Thames Water has been fighting to stay afloat since March when its investors declined to give it more money, raising the prospect of temporary nationalisation.
With a week until the participation deadline, the creditor group is now urging others to back the plan, which would see a new £1.5bn debt facility, plus a possible further £1.5bn.
Thames Water agreed to the proposition in October, but the deal requires the approval of 75% of all debt classes to pass.
Sky News has reported that KKR, one of the world’s largest investment firms, is in talks with Thames Water and its advisers about participating in a £3bn share sale which forms part of a wider recapitalisation plan.
The debt facility currently being proposed is a crucial step towards that share sale and recapitalisation, which executives hope will keep Thames Water from collapsing.
“Our creditor group is working intensively with the company to develop a plan that will ultimately lead to a restructuring that unlocks billions of pounds in new investment capital and helps deliver the improved service that customers and the environment deserve,” the group said in a statement.
“We want to work constructively with all parties to give Thames the best opportunity to attract the new equity it needs and allow for a full recapitalisation and successful turnaround.”
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A battle has broken out between the holders of Thames Water’s class A bonds, which account for the bulk of its borrowings, and its riskier class B debt.
Both sets of bondholders have submitted proposals to the company, with the class A’s arguing that theirs is more certain and the class B’s arguing that theirs will save the company hundreds of millions of pounds in fees and interest over a 12-month period.
Thames Water has already endorsed the class A group’s offer.
The class A bondholders must now secure backing for their proposal within the next fortnight. An initial court hearing is scheduled for 17 December.