LONDON - Thames Water Utilities Limited (TWUL) has announced a proposed amendment to its liquidity extension transaction, indicating substantial creditor backing as it works to bolster the company's financial stability. This update follows the initial launch of a consent process for a transaction support agreement (TSA) on October 25, 2024, and a subsequent practice statement letter issued on November 22, 2024.
The proposed amendment involves changes to the treatment of certain hedging agreements. Notably, the company has received support from creditors representing over 75% of various debt and hedging provider classes. With the proposed changes, TWUL anticipates similar support levels from Interest Rate and Index Hedging Providers and Liquidity Facility Providers.
Under the updated terms, a consent fee of 0.75% will be payable as contingent funding debt to Interest Rate and Index Hedging Providers who agree to the TSA by the record date for the restructuring plan. An additional fee structure is proposed, including a 3% fee on the record date mark-to-market, with 1.5% payable in cash post-restructuring plan implementation and the remainder contingent on a broader recapitalization transaction.
The amendment also introduces the option for hedging providers to include a mandatory or elective break clause in their agreements, exercisable from December 31, 2028, if TWUL does not achieve an investment-grade rating. Another break option is available on April 1, 2030, in the event of a holistic recapitalization transaction, subject to certain conditions.
Consent from a supermajority of various creditor groups is necessary to amend the TSA. As of today, approximately 50% of AHG Members, over 75% of bank group members, and around 50% of backstop providers have consented in principle. The process to secure the remaining consents is ongoing.
Thames Water's CEO, Chris Weston, emphasized the importance of creditor support and the progress made towards recapitalizing the business. The company is preparing for its final determination, which is crucial for the five-year business plan and turnaround strategy.
The proposed amendment to the TSA is accessible for review by creditors and interested parties through the website managed by Kroll Issuer Services Limited. This announcement is based on a press release statement and contains information previously considered inside information under UK market regulations.
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