Thames Water has announced this morning that it has secured the backing of creditors who hold in excess of 75% of the water company’s Class A Debt – the creditors have entered into the Transaction Support Agreement (TSA).
The deadline to accede to the TSA to access the non-cash early-bird fee of 0.75% and to accede to the Backstop Agreement was 11 November 2024.
The support from three quarters of its creditors paves the way for the next stage of the process to secure an emergency funding deal that that could provide up to £3 billion to stabilise Thames Water’s finances in the short term to extend its liquidity up to October 2026.
The Liquidity Extension Update released by Thames via the London Stock Exchange this morning follows a previous update issued by the company on 25 October setting out details of the proposed transaction and backstop agreement which would provide the utility with access to an initial tranche of super senior funding and related STID Proposals. If agreed, this would extend its liquidity runway which includes up to £3 billion of new money, in addition to access to cash reserves and debt extensions.
Under the terms of the transaction, Thames will have the opportunity to obtain up to £3 billion super senior funding comprised of an initial tranche of £1.5 billion which has been fully backstopped by certain creditors, with capacity for a further £1.5 billion across two tranches of £750 million, if Thames decides to makes an appeal to the Competition and Markets Authority (CMA) following receipt of Ofwat’s Final Determination.
Thames Water described the agreement as “an important milestone" in implementing the Liquidity Extension Transaction. A process to facilitate further creditor accessions to the TSA is ongoing.
As part of the TSA, the Class A creditors have also agreed to support the related Security Trust and Intercreditor Deed (STID) Proposals released on 25 October.
Thames Water said that early voting suggests that the requisite consent levels will be achieved at the first bondholder meeting, to be held on 18 November 2024 – the company expects to announce the outcome of the STID Proposals shortly thereafter.
The initial tranche of £1.5 billion in funding will be released in January if the refinancing plan receives court approval.
The current expected timetable for the implementation of the Restructuring Plan is:
- Convening Hearing: 17 December 2024
- Creditor Meeting: week commencing 13 January 2025
- Sanctions Hearing: 20 January 2025
- Effective Date: 31 January 2025
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