Unlock the digestive of free editor
Roula Khalaf, the FT editor, chooses her favorite stories in this weekly newsletter.
Thames Water has been given the green light to undertake up to 3 billion high -cost borrowing in an attempt to avoid bankruptcy, as the London Supreme Court signed in a controversial creditor rescue.
The service, already trying under 19.5 billion £ debt, had requested the court’s approval to borrow up to 3 billion from its high -ranking creditors. The company says it will give it a breathing room to increase capital from new investors and renegotiate its debts.
Mr. Justice Leech, who presided over a Supreme Court hearing earlier this month, approved the loan in a 178 -page trial on Tuesday. He said he met the necessary criteria under the law of English corporations and was not unfair to the owners of the lower ranking bonds.
“This is good news for our clients, puts our business on a stronger financial basis and enables us to continue to invest in our network and provide critical infrastructure improvements to our clients and the environment,” said Chief Executive I Thames Water Chris Weston.
Without the approval of the judge, Thames Water risked finishing cash on March 24, when 200m debt is because the service has no other way to repay. Thames Water then would probably have become the first water company to fall into the special government administration regime after services in England and Wales were privatized in 1989.
Rescue credit has proved controversial, however, as lenders including US Protection Fund Elliott Management are charging a heavy interest rate of 9.75 percent, along with other fees and sweeteners.
According to his judgment, Leech noted that the main interest rate on the loan was “very, very high” and that the advisory tariffs of the agreement “can be described as watering of the eyes”.
“Customers and residents who are fighting their bills will be terrified at these costs,” he wrote.
