Thames Water: Challenge to £3bn rescue deal dismissed

A £3bn rescue loan for Thames Water is set to go ahead after an appeal against the deal was dismissed.

The troubled firm secured the rescue loan in February, to stave off the prospect of the debt-laden company coming under government control.

But a small group of lenders had argued against the terms of the deal, while Liberal Democrat MP Charlie Maynard had argued that extra lending was not in the public interest.

This extra funding allows Thames to continue operating for at least another 12 months giving it time to restructure its nearly £20bn in debt and try to attract new investment.

The reasons for the Court of Appeal’s decision are yet to be released.

The BBC understands that Mr Maynard is still considering whether to appeal against this latest ruling to the Supreme Court.

Thames Water’s chief executive Chris Weston said he was “pleased” with the decision.

“We remain focused on putting Thames Water onto a more stable financial foundation as we seek a long-term solution to our financial resilience,” he said, adding that the firm’s “turnaround plan” can continue.

He added the initial tranche of £1.5bn would be provided in instalments over the coming months.

The UK’s largest water and waste company was set to run out of cash by the end of March and without the loan it was likely to have been placed into temporary nationalisation to keep services running.

Many UK water companies have large debts, but Thames Water’s problems are the worst, with debts of about £19bn.

The company has also faced heavy criticism over its performance in recent years following a series of sewage discharges and leaks.

Thames serves about a quarter of the UK’s population, mostly across London and parts of southern England, and employs 8,000 people.

The company had insisted that if the rescue deal was blocked, a government rescue would have cost taxpayers billions, as well as setting back the timetable to fix the business.

But others, including Mr Maynard, argued the plan mainly served the interests of its current lenders who stood to lose more of their money in an administration than they would if they could keep Thames Water running.

They had argued the public interest would best served by putting Thames under government control through a Special Administration Regime, which was the same mechanism employed when energy company Bulb went bust.