A group of investors has accused Thames Water of attempting to pressure London’s High Court by warning of temporary nationalisation if its preferred £3billion debt deal is not approved.
The court has begun hearing arguments over two competing plans to provide emergency funding to Thames Water, which serves nearly 16 million people across London and southeast England. The company has been on the brink of collapse for months, burdened with debts of approximately £19bn. It hopes to secure the £3bn in financing to stabilise operations while seeking at least £3.25bn in new equity investment.
Court Battle Over Rival Rescue Plans
At the centre of the case is a dispute between two groups of investors. One group, which holds Thames Water’s “class A” debt, has backed the company’s proposal and includes major US hedge funds such as Elliott Partners and Silver Point, as well as UK-based firms like Abdn and M&G. Thames Water argues that this plan is the only viable option to prevent insolvency.
The rival proposal comes from investors holding “class B” debt, who claim their alternative plan offers a more cost-effective solution. This group, led by Cayman Islands-registered Westonbirt LP, managed by Polus Capital Management, argues that the class A deal carries excessively high interest rates, which would ultimately burden customers.
Thames Water has told the court that failure to approve its preferred plan would leave nationalisation under the government’s Special Administration Regime (SAR) as the only alternative. However, class B investors countered that the company was forcing the court into an unfair decision, stating: “The court will have a gun put to its head.”
Public Concerns Over Rising Water Bills
The case has drawn public criticism, particularly amid concerns over pollution and sewage discharges into Britain’s rivers and seas. Around 80 campaigners gathered outside the court to protest against Thames Water’s financial restructuring, arguing that either debt deal would ultimately lead to higher household water bills.
MP Charlie Maynard and clean water advocacy groups have submitted objections to the court, raising concerns that interest costs—estimated at nearly 10% annually—would be passed on to customers. Some campaigners and politicians have argued that nationalisation could provide better value for taxpayers.
Thames Water Defends Its Position
During Monday’s hearing, Thames Water’s general counsel, Andy Fraiser, and chief financial officer, Alastair Cochran, faced questioning over the terms of the class A deal. Cochran acknowledged that a cheaper financing plan would benefit the company but insisted that the board must choose an option that is “implementable.”
Cochran also denied that Thames Water had decided to formally challenge the water regulator, Ofwat, over its decision to allow a 35% rise in customer bills over the next five years—less than the company had requested.
Meanwhile, some potential investors are reportedly waiting for nationalisation before considering bids, a claim Thames Water has denied knowledge of.
The court case is expected to continue for several days, with both sides presenting detailed arguments on the future of Britain’s largest water supplier.
For more updates on Thames Water’s financial crisis and its implications for customers and investors, keep following London Pulse News.
