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Thames Water has received approval from more than three-quarters of its top-ranking lenders to take out a new loan of up to £3bn and make other adjustments to its debt that will avert a cash crunch shortly after Christmas.
The utility, which serves 16mn customers in London and surrounding areas, has been struggling with £19bn of debt and is trying to avoid being renationalised under the government’s special administration scheme.
While the loan still needs to be approved at a High Court hearing next month, the results of the vote mean the plan has passed a key legal threshold showing that Thames has support from a majority of its largest class of bondholders.
The loan proposal has come from holders of Thames Water’s top-ranking class A bonds, which account for the bulk of its debt. A smaller group of class B bondholders have in recent weeks proposed their own £3bn plan that they say could save the utility hundreds of millions of pounds in interest and other costs.
A spokesperson for the class A bondholders described it as “a decisive vote of confidence in the first stage of our restructuring plan for Thames Water from a large group of its creditors”.