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UK's Thames Water rescue plan faces creditor-group appeal

Thames Water, Britain’s largest water supplier, was again in court on Tuesday when a group junior creditors filed a lawsuit over a debt lifeline of 3 billion pounds ($3.9 billion), which is needed to keep the company afloat.

The water industry is facing a backlash from the public. Thames Water's mismanagement is being blamed for the sewage pollution of rivers and its 18 billion pounds of debt, which has brought it to the brink.

Thames Water avoided an emergency state rescue by securing court approval in February for new loans. However, a group of junior creditors as well as a public interest group filed a complaint. The court will continue to sit until Thursday.

Both groups are opposed to the high costs of the new loans. They want Thames Water placed under the Special Administration Regime of the Government, a temporary nationalisation that would allow water services to continue to operate until the company was eventually sold.

Mark Phillips, a barrister who represents junior creditors, stated on Tuesday that senior creditors such as Abrdn and Elliott Investment Management were given "valuable" additional rights, disadvantaging Mark's clients.

In legal documents, the group stated that "all creditors will be treated equally" by special administration.

Charlie Maynard, a lawmaker from the Thames Water constituency, is the leader of the group's public appeal. The appeal is centered on the environment as well as ensuring that taxpayers and Thames Water customers get value for their money.

The Thames Water Group released arguments in its support stating that the "terms of the debt lifeline are worse for the Thames Water Group...than a rescue by special administrator".

Thames Water stated that the debt lifeline program remained their best option and would not have any financial impact on taxpayers or customers.

A spokesperson for the company said, "It enables us to continue investing in our network to enhance critical infrastructures for our customers as well as our environment."

The government has said that it wants Thames Water to be free of administration, and is focused on reforming Britain’s privatised water industry to improve its environmental performance.

As the legal battle continues, Thames Water is worried that it could run out money. After the outcome of the appellations, which is expected to be in the next few weeks, either side could decide to bring the matter before the Supreme Court.

Steve Reed, the Environment Minister, said that on Monday, the government is ready to intervene if necessary.

(source: Reuters)