Part of Thames Water restructure plan ‘holds company to ransom’, High Court told
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One of the terms of a plan to restructure Thames Water “holds the company to ransom”, the High Court has heard. The utility, which is England’s biggest water company with about 16 million customers, is in about £16 billion of debt and needs £3.3 billion over the next five years to keep running, with money due to run out by late March.
At a hearing last month, a High Court judge allowed a restructuring plan known as the “A plan” to be put to creditors for approval, which would provide a loan of up to £3 billion with a 9.75% interest rate. But a group of secondary creditors has proposed an alternative known as the “B plan” which they claim would provide the company with the same funding on better terms.
On Monday, barristers for Class B creditors told a hearing in London that a term of the “A plan” known as the “June release condition” (JRC) would allow Class A creditors to “dictate” the terms of further funding beyond June 30 if certain conditions are not met.
Tony Singla KC, for the Class B creditors, told the court the JRC would allow Class A creditors to “wrestle control of this company and call the shots”. He said: “The JRC holds the company to ransom because unless these conditions are met the company will risk entering into (special administration).
“It is putting the company into the position whereby the Class A will be able to say ‘We are not releasing any further funding’. “The JRC gives the Class A creditors a right to veto. It allows them to direct the way in which this future recapitalisation process will go.”.
