The Appeal Court has this morning started a three day hearing of an appeal against the High Court decision to allow Thames Water’s restructuring plan which would see it receive an emergency £3 billion loan from its Class A creditors.
The additional loan, which would come on top of Thames’ existing £19.5 billion debt, is intended to allow the financially stricken water company time to renegotiate its debts and raise equity from new investors.
According to recent reports, the emergency loan, which has a 9.75% annual interest rate, would cost £898 million over six months in servicing interest and consultancy fees, including £210 million paid by the water company to financial advisers involved in drawing up the bailout plan.
A strong legal team is representing the public for free, instructed, on behalf of the customer and public, by Liberal Democrat MP for Witney, Charlie Maynard. The campaigners, who include Windrush Against Sewage Pollution, the Rivers Trust, the Angling Trust and We Own It, are calling for Thames Water to be put into Special Administration.
Ahead of this morning’s hearing the MP appeared on both the BBC Radio 4’s Today programme and on Sky News to argue the case for Special Administration.
In response to the Sky News interviewer’s comment that “Thames Water are saying that this move would be a benefit to customers, a benefit to the environment”, Charlie Maynard said:
“This move is not benefitting Thames Water customers at all. So we’ve got this enormous debt mountain, and what they’re proposing doing is adding even more debt on top of that.
“Meanwhile, every customer in the Thames Water catchment area has just got a 35% increase on their bill. The finances of this company are a complete mess…. Right now we’ve got this debt mountain that you laid out..
Meanwhile, we’ve just got £1.2 billion of cash flow coming in every year – that was to March 24.
So it’s completely unsustainable. Two ratings agencies have just marked it down to almost the lowest credit rating you can have – DDD is junk bond territory.
If this was anything but a utility, it would already be in bankruptcy and that’s what we’re advocating. It should be put into something that’s called Special Administration – which is bankruptcy – so that we can cut that debt mountain, put the balance sheet into a strong financial position again.”
Click here to watch the live Appeal Court hearing over the next three days.
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