The PA news agency explains why Thames Water needs emergency money and what happens next.
The High Court has approved a £3 billion loan for Thames Water, preventing its imminent collapse. The company, which supplies water to 16 million households in London and the South East, still faces £16 billion in debt. The loan, agreed internally last year, is designed to keep the company operational for about one year. Thames Water has requested permission to raise consumer bills by more than 35% over the next five years, sparking public anger due to large bonuses paid to executives despite financial struggles. The loan, provided by creditors owed £11.5 billion, will require £800 million in interest payments over 2.5 years. Currently, 28% of water bills go toward debt repayment, expected to rise to 31% this year. Thames Water, which had no debt upon privatization in 1989, saw its debt balloon to £10 billion by the time Macquarie sold it. The company is under temporary government control, with potential buyers, including Suez, expressing interest.
