Interest and fees related to the loan 'could easily approach or exceed £1 billion'
Protests will take place at the High Court this morning as Thames Water seeks approval for a £3 billion temporary bailout.
Campaigners are set to gather outside the Royal Courts of Justice to oppose the bailout plea, which We Own It has said will rack up £300 million in interest a year over two and a half years, and add an extra £250 a year to customers’ bills.
Groups including We Own It, Windrush Against Sewage Pollution and the Henley Mermaids are calling for Thames Water to be brought back into public ownership instead of receiving the bailout at customers’ expense.
A letter from Cat Hobbs, director at We Own It, to the High Court, states that the cost of interest, bondholder consent fees and advisor fees related to the loan “could easily approach or exceed £1 billion in due course”.
Hobbs’ letter said that “it is particularly egregious” that the transaction contains a 3.5% fee for the primary backstop providers, which could enable the backers to achieve an internal rate of return (IRR) of nearly 20%.
Thames Water is currently in £15.7 billion worth of debt, and is trying to secure the £3 billion loan to remain operational beyond the middle of next year.
Court approval is needed because the loan terms effectively breach Thames Water’s agreements with existing creditors by reducing the priority of their claims.
In July, regulator Ofwat proposed an average £19 a year ceiling on water bill rises, with a final decision due this month.
Thames Water responded to this proposal stating that it will not survive unless it is allowed to increase water bills by almost 60% over a five-year period.
Despite its troubled finances, Thames Water gave executive bosses £770,000 in bonuses in 2023-24.
Oftwat said the bonuses were not justified given the water company had a two star Environmental Protection Agency (EPA) rating in 2023 and received a criminal conviction as a result of an Environment Agency prosecution.
Weston argued: “We need to attract talent to this company… If we don’t offer competitive packages, people will not come and work at Thames”.
Weston, who was hired in January, was also awarded a bonus of £195,000 for his first three months at the company.
In November, the regulator gained new powers to prevent bonuses being funded by customers if the company is judged to have missed environmental or performance targets.
Olivia Barber is a reporter at Left Foot Forward
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