Thames Water faces court claim that £3bn bailout is ‘poor, short-term fix’
Environmental campaigners will challenge the granting of a high-interest £3bn emergency loan to struggling Thames Water at an appeal on Tuesday, arguing the “eye-watering” costs for a short-term fix are not in the public interest.With protests planned outside the court of appeal, Charlie Maynard, a Liberal Democrat MP who represents the campaigners, will argue in a three-day hearing that the public and consumer interest is not served by the debt package, which comes with a bill of almost £1bn in interest payments and financial adviser fees.Thames, which has 16 million customers and 8,000 employees, has been on the verge of collapse for months with debts of about £19bn.The company was given approval for a £3bn debt package by the high court last month, but campaigners who have been fighting its plans won the right to take the decision to appeal.Represented by a legal team that is working for free, the groups, including Windrush Against Sewage Pollution, the Rivers Trust, the Angling Trust and We Own It, say the approved restructuring plan is a “poor, short-term fix” that “aggravates rather than mitigates the Thames Water doom loop”. Taking the company into special administration, which is a power contained in the 1991 Water Industry Act, would be cheaper and in the public interest, they say.Thames, Britain’s biggest water utility company, said the emergency loan was needed to stave off an imminent cash shortfall and as a bridge to attracting new equity for wider restructuring.But the loan carries a 9.75% annual interest rate and will cost £898m over six months in consultancy fees and servicing interest. This includes £210m Thames Water has paid financial advisers who helped draw up the bailout.These costs were described as “eye-watering” by Mr Justice Leech, and “deeply uncomfortable” when he approved the plan.Maynard, who is acting on behalf of more than 25 MPs, 34 charities and a number of individual Thames Water customers, will argue the judge was wrong to sanction the bailout.In court documents William Day, the lawyer representing Maynard, said the judge had accepted that the only alternative to the costly loan was to put Thames into special administration.skip past newsletter promotionThe planet's most important stories. Get all the week's environment news - the good, the bad and the essentialPrivacy Notice: Newsletters may contain info about charities, online ads, and content funded by outside parties. For more information see our Privacy Policy. We use Google reCaptcha to protect our website and the Google Privacy Policy and Terms of Service apply.after newsletter promotionDay will argue the cost of special administration would be less than half the costs of the bailout loan that has been approved. Day said Thames had offered no evidence that the emergency debt package would help it raise billions of pounds of additional equity to repair its finances over the longer term, and should not have been approved. “The company should not have been granted sanction simply by saying, ‘We will give it a go’, especially where the costs of taking a punt are so high,” Day said.Thames is raising average water bills by £31 a year, pushing the average household bill to £588 between now and 2030, to pay for £21bn investment into its treatment works and pipes, which the company admits are assets it has “sweated” for decades. But it is taking legal action to raise bills even higher than the 35% allowed by Ofwat, the industry regulator for England and Wales.The approved bailout would give Thames £1.5bn in cash, released monthly, plus up to £1.5bn more to see it through the fight to increase customer bills further.A Thames Water spokesperson: “The restructuring plan sanctioned by the high court is the best way to resolve the issues facing Thames Water. We remain confident in our plan and are focused on its delivery. It does not financially impact taxpayers across the UK or our customers, and it allows us to continue to invest in our network to improve critical infrastructure for our customers and the environment, without further delay. It is better than any other alternative course of action and we do not believe that the grounds for appeal meet the required thresholds.”
Campaigners to argue in court of appeal that plan is not in public interest and special administration is best optionEnvironmental campaigners will challenge the granting of a high-interest £3bn emergency loan to struggling Thames Water at an appeal on Tuesday, arguing the “eye-watering” costs for a short-term fix are not in the public interest.With protests planned outside the court of appeal, Charlie Maynard, a Liberal Democrat MP who represents the campaigners, will argue in a three-day hearing that the public and consumer interest is not served by the debt package, which comes with a bill of almost £1bn in interest payments and financial adviser fees. Continue reading...
Environmental campaigners will challenge the granting of a high-interest £3bn emergency loan to struggling Thames Water at an appeal on Tuesday, arguing the “eye-watering” costs for a short-term fix are not in the public interest.
With protests planned outside the court of appeal, Charlie Maynard, a Liberal Democrat MP who represents the campaigners, will argue in a three-day hearing that the public and consumer interest is not served by the debt package, which comes with a bill of almost £1bn in interest payments and financial adviser fees.
Thames, which has 16 million customers and 8,000 employees, has been on the verge of collapse for months with debts of about £19bn.
The company was given approval for a £3bn debt package by the high court last month, but campaigners who have been fighting its plans won the right to take the decision to appeal.
Represented by a legal team that is working for free, the groups, including Windrush Against Sewage Pollution, the Rivers Trust, the Angling Trust and We Own It, say the approved restructuring plan is a “poor, short-term fix” that “aggravates rather than mitigates the Thames Water doom loop”. Taking the company into special administration, which is a power contained in the 1991 Water Industry Act, would be cheaper and in the public interest, they say.
Thames, Britain’s biggest water utility company, said the emergency loan was needed to stave off an imminent cash shortfall and as a bridge to attracting new equity for wider restructuring.
But the loan carries a 9.75% annual interest rate and will cost £898m over six months in consultancy fees and servicing interest. This includes £210m Thames Water has paid financial advisers who helped draw up the bailout.
These costs were described as “eye-watering” by Mr Justice Leech, and “deeply uncomfortable” when he approved the plan.
Maynard, who is acting on behalf of more than 25 MPs, 34 charities and a number of individual Thames Water customers, will argue the judge was wrong to sanction the bailout.
In court documents William Day, the lawyer representing Maynard, said the judge had accepted that the only alternative to the costly loan was to put Thames into special administration.
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Day will argue the cost of special administration would be less than half the costs of the bailout loan that has been approved. Day said Thames had offered no evidence that the emergency debt package would help it raise billions of pounds of additional equity to repair its finances over the longer term, and should not have been approved. “The company should not have been granted sanction simply by saying, ‘We will give it a go’, especially where the costs of taking a punt are so high,” Day said.
Thames is raising average water bills by £31 a year, pushing the average household bill to £588 between now and 2030, to pay for £21bn investment into its treatment works and pipes, which the company admits are assets it has “sweated” for decades. But it is taking legal action to raise bills even higher than the 35% allowed by Ofwat, the industry regulator for England and Wales.
The approved bailout would give Thames £1.5bn in cash, released monthly, plus up to £1.5bn more to see it through the fight to increase customer bills further.
A Thames Water spokesperson: “The restructuring plan sanctioned by the high court is the best way to resolve the issues facing Thames Water. We remain confident in our plan and are focused on its delivery. It does not financially impact taxpayers across the UK or our customers, and it allows us to continue to invest in our network to improve critical infrastructure for our customers and the environment, without further delay. It is better than any other alternative course of action and we do not believe that the grounds for appeal meet the required thresholds.”