Thames Water to discover if restructuring plan has been approved on Tuesday

Thames Water will discover whether a High Court judge has approved plans to restructure the struggling utility on Tuesday.

Thames Water Utilities Holdings Limited (TWUH), the parent company of Thames Water Group (TWG), England’s largest water company, is set to run out of money by late March and risks entering special administration if a judge does not approve the scheme, known as the company plan, to inject up to £3 billion to keep it afloat.

But a smaller secondary group of creditors opposes the sanctioning of the plan and is instead proposing an alternative known as the “B plan” which it claims would provide the company with the same funding on better terms.

Earlier this month, Mr Justice Leech heard five days of arguments between lawyers for TWUH and different groups of creditors over whether the company plan should be sanctioned.

The judge is now expected to hand down judgment at 9.30am on Tuesday, which will be followed by a hearing dealing with consequential matters arising from the ruling.

TWG serves about 16 million customers, about 25% of the UK’s population, and owns more than 20,000 miles of water mains and more than 68,000 miles of sewers across London, the Thames Valley and the Home Counties.

It has approximately 8,000 employees and more than 400 water and sewage treatment sites.

But the company is in about £16 billion of debt and needs £3.3 billion over the next five years to keep running.

The restructuring bid marks an attempt to shore up its finances without a bailout from investors.

It has also been at the centre of growing public outrage over the extent of pollution, rising bills, high dividends, and executive pay and bonuses at the UK’s privatised water firms.

The company plan would provide £1.5 billion of funding, with a further £1.5 billion potentially available and a 9.75% interest rate.

It has been approved by creditors holding more than 75% of its Class A debt, which is worth about £11.5 billion and is the least risky class of bonds in its debt pile.

Tom Smith KC, for the company, has previously said the plan was “an interim measure” to keep the company running before a “substantive restructuring” due later this year.

The utility’s Class B bondholders drew up their rival scheme in October, which they say provides “committed” funding of £3 billion with a lower interest rate of 8% and other different terms.

They have previously claimed that one term of the company plan known as the June release condition, which concerns the release of further funding, “holds the company to ransom”, and that the company’s proposal leaves them worse off, meaning it cannot be approved.

A hearing to decide whether the “B plan”, which its supporters said provides a “better result for the company”, can be put to creditors is due to be held on Wednesday.