Thames Water says taxpayers should bail if they don’t get a £3bn bailout

Taxpayers will have to pay back Thames Water if a £3billion bailout is blocked, the utility said at a court hearing yesterday.

Amid a legal battle with creditors, Britain’s biggest water supplier said it would run out of cash by March next year and go into default unless it gets the green light.

The struggling firm moved to pursue the loan after a judge agreed to a court date to begin early next year.

It was one of several hurdles the company had to clear to avoid privatization, and the lawsuit came just days before the water authority’s decision.

Ofwat will tomorrow make a decision on how much Thames Water will be billed over the next five years – a decision which will have a major impact on the utility’s restructuring plans.

The debt-laden company wants to pay its 16m customers in London and the south-east 59 per cent more by 2029 to pay for infrastructure upgrades.

If Ofwat censures the firm, it could scrap its plans to find a buyer for the business as it seeks a separate £3billion cash injection.

Thames Water’s legal team said yesterday that without a quick loan, the Government would be forced to step in and take control of the firm in a so-called special administration.

Some 75 percent of top borrowers including investment giants BlackRock, Abrdn and M&G, have agreed to a loan with an interest rate of 9.75 percent.

They have ‘super-senior’ status, meaning they are first in line for compensation if the company fails.

And the deal will also see the payment dates for its loans extend by two years.

The loan will keep the firm afloat until 2026 while the organization carries out a long-term restructuring plan, a Thames Water spokesman said.

But a group of smaller investors have argued that Thames Water’s plan is not good for the industry.

They have made several different requests, which the company has said are not possible.

Meanwhile, campaigners rallied outside court calling for the plan to be banned, saying the debt would add up to £250 a year to customers’ bills.

Yesterday’s hearing was the first in two phases to accept the debt. A High Court judge will decide in February whether to approve the company’s ambitious plan.

The Court had to agree that the terms of the loan breached Thames Water’s agreements with its existing lenders by pushing their claims down the seniority list.