Thames Water has initiated further legal moves to keep the company’s interim recapitalisation transaction on track – and says that the only alternative to the company’s restructuring plan (RP) is special administration, and that there is presently no alternative implementable transaction for Thames to avoid special administration if the company’s plan is not approved.
The comment comes in a letter dated 24 January (published by the London Stock Exchange) from the water company to the MD of Deutsche Trustee Company Ltd, the Security Trustee.
Thames has requested that the Security Trustee should concur with a consent and waiver request in relation to the (Security Trust and Intercreditor Deed) STID Proposal approved by the majority Class A creditors.
The letter is signed by Christopher Weston and Sir Adrian Montague from the water company on behalf of Thames Water Utilities Ltd, Thames Water Utilities Finance PLC and Thames Water Utilities Holdiings Ltd.
The latest developments stem from an alternative Restructuring Plan proposed by the company’s Class B creditors.
The letter to Deutsche states:
“The Relevant Class B Creditors continue to advance their proposed Class B RP but without the support of the TWU Financing Group.
“The TWU Financing Group’s view remains that the relevant alternative to the Company RP is special administration, and that there is presently no alternative implementable transaction for the Proposer to avoid special administration if the Company RP is not sanctioned.”
Thames Water has been engaging with its creditors to seek to extend its liquidity runway – the utility has identified a potential solution to extend its the runway through raising financial indebtedness under super senior financing and extending maturity and amortisation dates.
Both Thames Water and the TWUF Group have issued RNS Announcements in relation to the publication of the Class B PSL, noting that:
“The Class B PSL is not approved or authorised by TWUL or TWUHL. The Board and leadership team remain focused on implementing the Company Plan, stabilising the business and seeking the best financial and operational outcome for customers, the environment, UK taxpayers and the UK economy”.
Secured creditors – the Class A creditors - representing in excess of 90% by value of the secured debt of the TWU Financing Group entered into a transaction support agreement dated 25 October 2024. Thames Water launched four STID Proposals on 25 October 2024 in relation to certain Events of Default for which consent was obtained on 18 November 2024.
On 10 December 2024 Thames Water filed a claim form in respect of its restructuring plan with the High Court ahead of a convening hearing on 17 December 2024. On 20 December Thames then notified the Security Trustee of another STID proposal setting out a waiver in respect of the Alternative Interim restructuring plan proposed by Class B Creditors who had identified a potential alternative solution to extend Thames’ liquidity runway. Consent for Thames' 20 December STID Proposal was obtained on 10 January 2025.
Thames Water’s latest consent and waiver request letter follows on from a practice statement letter issued 7 January 2025 by an unnamed Class B Creditor in connection with implementing the Class B restructuring plan.
On 21 January 2025 five classes of Class A creditors gave approval at meetings convened to consider the company's restructuring plan – while the Class B Creditor class and the Subordinated Creditor class voted against it. The restructuring plan is now scheduled to be considered by the Court at the sanction hearing scheduled for 3 - 6 February 2025.
This latest STID letter from Thames Water says that “in order to provide as much stability to the TWU Financing Group as possible”, it had launched a STID Proposal on 20 December 2024 in relation to certain Events of Default which would otherwise have occurred in connection with the Class B proposal and any other potential alternative solution to extend Thames’ liquidity runway from any other creditor groups.
“The waiver is being pursued solely for the purposes of continuing to facilitate the Company RP”, the letter says.
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