Thames Water could be required to pay $1 billion (£749 million) as part of a proposed deal where senior creditors would take control of the utility. This significant sum includes substantial fees for advisory services from bankers and lawyers, along with other associated costs, according to a report by the Financial Times based on a creditor submission. The deal highlights the high costs involved in private sector turnaround efforts for financially distressed companies.
The breakdown of the $1 billion payment includes approximately $200 million (£160 million) in commitment fees to lenders backing a $8.2 billion (£6.55 billion) debt package. Additionally, around $318 million (£254 million) is allocated for advisory fees to lawyers and bankers involved in the takeover. Thames Water would also pay about $357 million (£285 million) in accrued interest to creditors upon the deal's completion, and $63 million (£50 million) in fees owed to other creditors.
Under the proposed deal, creditors plan to inject $4.2 billion (£3.35 billion) in new equity and provide $4.1 billion (£3.25 billion) in new debt, with an option to increase debt by an additional $4.1 billion (£3.3 billion). In return for $880 million (£700 million) in investor funding to improve its assets, Thames Water would avoid certain new penalties over a four-year period. The utility reiterated its commitment to securing recapitalization to restore financial stability and support its turnaround plans. Regulators, such as Ofwat, are reviewing the proposals to assess the potential benefits for customers and the environment. This comes as Thames Water grapples with over $21.3 billion (£17 billion) in debt and has recently taken emergency liquidity measures.
