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Thames Water is facing a critical situation as its battle for survival escalates. The company, which serves around 16 million households in south-east England, is grappling with a staggering £19 billion debt burden. In an effort to avert financial collapse by Christmas, Thames Water has proposed a £1.5 billion emergency loan and restructuring plan.
However, tensions have arisen among debtholders, with some creditors feeling sidelined in the negotiations. A group of creditors, including hedge funds, banks, and insurers holding lower-ranking bonds, have expressed their concerns and enlisted the support of litigation law firm Quinn Emanuel to represent their interests.
Thames Water’s largest creditor group, comprising over 100 institutions with more than £10 billion in bonds, has been working on a restructuring plan and emergency loan of at least £1.5 billion. This plan would take precedence over all existing debt, potentially leaving lower-ranking bondholders at risk of heavy losses or bond write-offs if the company faces renationalization.
The conflict of interest between higher-ranking class A bondholders and lower-ranking class B holders has further complicated negotiations. The class A bondholders, who hold around £16 billion in debt, have been in talks with Thames Water to provide a new loan that would rank above the existing debt.
Amidst these developments, Quinn Emanuel’s lawyers have emphasized the importance of ensuring that any new financing does not impede the company’s ability to pursue equity-raising initiatives. They have also highlighted the potential for class B holders to contribute significant new funds to Thames Water on competitive terms.
The outcome of these negotiations will be crucial for Thames Water’s future, as failure to reach an agreement with debtholders could result in the company being placed under special administration by the government. The stakes are high for all parties involved, and the coming weeks will be critical in determining the company’s financial fate.