But water industry insiders have warned that the cost could be passed on to consumers, who are already facing rising water bills.
The deal, approved at the High Court, gives Thames Water £1.5bn in upfront cash and should stave off the collapse of Britain’s biggest water company for another few months.
The deal will allow the company to avoid special administration, which would effectively place the firm under Government control.
Thames Water, which has 16 million customers and 8,000 employees, has been on the verge of collapse for a couple of years, with debts of about £19bn. The financial difficulties have contributed to underinvestment in the pipes and drains needed to prevent sewage overflows into rivers and seas.
Last week, a major leak in South London left an estimated 10,000 homes without a reliable water supply for several days, in a repeat of a similar incident in December 2024.
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Thames Water has already announced bill hikes of up to 35% for customers from April – and it has appealed for permission for more bill hikes.
The company argued in court that it would run out of money within weeks if the emergency debt deal did not go through.
Adrian Montague, chair of Thames Water, said: “The court’s approval of the company plan marks a significant milestone for Thames Water, enabling us to proceed with the implementation of the liquidity extension transaction.
“Its implementation is a key step in strengthening our long-term financial resilience and will allow us to continue progressing the equity raise process and a holistic recapitalisation transaction, as well as complete the CMA appeal process. Critically, it enables the management team to continue progressing the turnaround.”
The Liberal Democrats have argued that Thames Water customers would be better served if the company was in Government control. The party’s view is echoed by GMB Union.
Cliff Roney, water worker and GMB Union activist, said: “Thames Water have no shame. They have been rewarded for years of mismanagement and passing costs on to consumers with the right to rack up more debt, more interest, and more fees.
“Who will pay for this? Ordinary Londoners, of course. The Government must urgently bring Thames Water into public ownership while protecting staff terms, conditions, and pensions.”
