The water company has just £500m in cash, and hopes the new money will extend its ability to function for at least another year.
Thames Water said today that the money will allow the firm “to continue with the planned investment and maintenance of our infrastructure in order to continue to meet customers’ needs, and our environmental responsibilities”.
Over the summer, Thames Water was made to appoint an independent monitor and develop a ‘suitable’ turnaround plan by regulator Ofwat after Moody’s downgraded its credit rating to junk.
Ofwat also hit the water company with a £104m fine related to the companies’ poor management of wastewater treatment works and wider sewer networks.
Today, Thames Water announced that an initial tranche of £1.5bn has been fully backstopped by creditors, with other debt providers having the opportunity to participate until 11 November.
The backstop had been rumoured over the last couple of months, with large US private equity funds approached for funding.
The water company added that there was capacity for a further £1.5bn, it makes an appeal to the Competition and Markets Authority.
This would extend Thames Water’s liquidity to October 2025, with the ability to extend further to May 2026 if it makes the appeal to the CMA.
“The board and leadership team remain focused on stabilising the business and today’s announcement is an important step in the process to increase its long-term financial resilience,” said Thames Water chair Adrian Montague.
“There will be further stages and we will continue to work collaboratively with our many stakeholders as we look to attract new equity into the business and seek a final determination that enables the delivery of our ambitious business plan for the next five years.”
“Today’s news demonstrates further progress to put Thames Water onto a more stable financial footing as we seek a long-term solution to our financial resilience,” added Thames Water CEO Chris Weston.
