Thames Water could be required to pay as much as £749 million ($1 billion) in fees, interest, and related costs if a proposed restructuring deal that would transfer control of the utility to its
senior creditors is approved, according to a report by the Financial Times on Wednesday citing creditor documents.
The proposed transaction includes £160 million in fees payable to senior creditors and a further £254 million in other associated costs. Upon completion, Thames Water would also pay approximately £285 million in accrued interest to creditors, along with an additional £50 million in fees owed to other lenders.
As part of the restructuring package, the utility would receive £700 million in investor funding aimed at upgrading infrastructure and improving operational assets. In return, the company could avoid certain regulatory penalties over the next four years.
Under the proposal, creditors would inject £3.35 billion in fresh equity and provide £3.25 billion in new debt financing. The agreement also includes an option to raise an additional £3.3 billion in debt if required.
Thames Water is expected to pay £160 million in commitment fees to lenders supporting the £6.55 billion debt package. Investment firm Apollo is set to backstop the entire credit facility and could receive the majority of those fees, while other participating creditors would receive smaller shares.
The creditor group has also outlined a new management strategy that could pave the way for a public listing of Thames Water by 2030.
UK water regulator Ofwat told the Financial Times that it is reviewing the proposals to determine whether they would deliver benefits for customers and the environment. Photo by Jim Linwood, Wikimedia commons.
