The Court of Appeal has upheld Thames Water’s £3bn emergency bailout loan, dismissing an appeal from environmental campaigners and a group of the company’s creditors. The decision, published on Monday, allows the utility firm to continue its operations while attempting to restructure its finances and secure new investments.
Appeal court judges rejected the challenge after a three-day hearing last week. The appellants, comprising environmental groups and a subset of Thames Water creditors, argued that the "eye-watering" cost of the loan, with interest rates of 9.75%, was not in the public interest. They contended that temporarily nationalizing the company under a special administration regime would be a more cost-effective solution.
However, the ruling means Thames Water, which serves 16 million customers and employs 8,000 people, will receive an initial £1.5bn in cash from creditors, with further tranches of funding available if needed. The company is also pursuing an appeal to increase bills beyond the 35% cap set by industry regulator Ofwat.
Thames Water had warned the court that it would run out of money by 24 March if the emergency loan was not approved. Despite the bailout, the company still faces the challenge of raising billions in additional equity to stabilize its finances in the long term. Last week, Thames Water stated it was considering multiple bids from unnamed investors.
Thames Water had warned the court that it would run out of money by 24 March if the emergency loan was not approved
Following the ruling, Thames Water CEO Chris Weston said: “We remain focused on putting Thames Water onto a more stable financial foundation as we seek a long-term solution to our financial resilience and in order to continue to implement our turnaround plan so we can deliver better results for our customers and the environment while seeking to attract new capital into the business. As we have previously stated, the Company Plan will not affect customer bills but will provide continued investment in our network to fix pipes, upgrade our sewage treatment works, and maintain high-quality drinking water. We remain of the view that a market-led solution is in the best interest of customers, UK taxpayers and the wider economy."
Despite the ruling, campaigners voiced concerns to The Guardian. Charlie Maynard, Liberal Democrat MP for Witney, speaking on behalf of environmental charities, strongly criticized the outcome: "Thames Water remains a cash cow for its lenders, while its 16 million customers are left to foot the bill for the company’s ludicrously expensive interest charges, advisory fees and mounting debts. It is in the Government’s power to end this now for the benefit of the British public and seek to put the company into special administration. We must not stand back and allow Thames Water’s lenders to keep lining their pockets at the expense of customers and the environment while our regulators sit on their hands and the company pumps gallons of sewage into our rivers, neglects basic repairs and hikes up customers’ bills."
Thames Water has initiated consent and waiver requests from creditors to facilitate the continued release of funds, with a voting deadline set for 31 March 2025. The company remains optimistic about securing the necessary approvals.
