Thames Water Utilities
Limited
13 December 2024
Liquidity Extension
Update
Thames Water Utilities Limited announces increased creditor
support and a proposed amendment to its liquidity extension
transaction
Chris Weston, CEO, Thames Water said: "We remain focused on stabilising the business and today's
announcement is yet further demonstration of the support of our
creditors and the progress we are making to increase the company's
long-term financial resilience. We continue to work collaboratively
with our many stakeholders to recapitalise our business and attract
new equity. We look forward to receiving our final
determination, a fundamental element of our turnaround and of our
ambitious business plan for the next five years."
Thames Water Utilities Limited
("TWUL") launched a consent
process for a transaction support agreement ("TSA") in connection with a liquidity
extension transaction (as set out in a term sheet appended to the
TSA) ("Liquidity Extension
Transaction"), a related
backstop agreement in relation to an initial tranche of super
senior funding (the "Backstop
Agreement") and related STID Proposals on 25 October 2024.
Thames Water Utilities Holdings Limited ("TWUHL") issued a practice statement
letter on 22 November 2024 (the "PSL") which provided creditors with
notice of a convening hearing in connection with implementing the
Liquidity Extension Transaction via a restructuring plan under Part
26A of the UK Companies Act 2006 (the "Restructuring Plan").
Following the launch of the TSA,
TWUL has continued its discussions with committees of Secured
Creditors together representing a substantial majority of TWUL's
Secured Debt and, following such discussions has today proposed an
amendment to the TSA in relation to the
treatment of certain hedging agreements (as set out further
below).
At the time of this announcement,
creditors representing over 75% of the Class A Debt (Make-Whole)
Providers, the Class A Debt (Non-Make-Whole) Providers and the
Currency Hedging Providers have acceded to the TSA.
Based on the discussion to date and
provided that the proposed amendments to the TSA (described below)
are approved, TWUL expects that creditors representing over 75% of
Interest Rate and Index Hedging Providers and the Liquidity
Facility Providers would shortly thereafter accede into the
TSA.
Updated Liquidity Extension
Transaction Terms
It is proposed that the TSA and the
Term Sheet appended to the TSA are updated to reflect the position
set out below (the "Proposed
Amendment"):
·
Fees
o The
consent fee in respect of the mark-to-market of the Interest Rate
and Index Hedging Providers who
accede to the TSA by the
record date for the Restructuring Plan (the "Record Date") would be 0.75% (payable
as CF debt as set out in the Term Sheet).
o In
addition, a fee of 3% in respect of the Record Date mark-to-market
of the Interest Rate and Index Hedging Providers of
which:
§ 1.5% would
be payable in cash following implementation of the Restructuring
Plan (provided the relevant Interest and Index Hedging Provider is
a Consenting Creditor under the TSA);
§ the
remaining 1.5% would be payable in cash following the
implementation of any more holistic recapitalisation transaction,
unless:
·
the transaction is implemented by way of
restructuring plan and (if afforded the relevant vote) the relevant
class of Interest Rate and Index Hedging Providers do not vote in
favour of such restructuring plan (voting as a class);
or
·
that Interest and Index Hedging Provider exercises
a termination or close out right which arises directly and only as
a consequence of a restructuring plan required to implement such
holistic recapitalisation transaction.
o An
additional 1.00% fee per annum would accrue in respect of the
Interest Rate and Index Hedging Agreements which are outstanding on
the Record Date (calculated by reference to the mark-to-market on
the Record Date and each anniversary thereafter). Initially the fee
would accrue until the earlier of the completion of a
Recapitalisation Transaction or the end of the stable platform
period at which time the fee would be payable. Thereafter this fee
would continue to accrue and be paid in cash semi-annually until
the Investment Grade Condition (as defined below) is
met.
·
Breaks
o If
elected by an Interest Rate and Index Hedging Provider, a
break would be included within the relevant
Interest Rate and Index Hedging Agreements which is mandatory or
exercisable (at the option of the relevant Interest Rate and Index
Hedging Provider) on and from 31 December 2028 if TWUL and/or TWUF
does not at that time or any time thereafter have an issuer credit
rating, Class A debt rating or a corporate family rating from at
least two Rating Agencies which is an investment grade rating (the
"Investment Grade
Condition").
o TWUHL, TWUL and TWUF will agree to engage with Interest Rate
and Index Hedging Providers in connection with any holistic
recapitalisation transaction. If elected by an Interest Rate and
Index Hedging Provider, a break would be included within the
relevant Interest Rate and Index Hedging Agreements which is either
mandatory or exercisable (at the option of the relevant Interest
Rate and Index Hedging Provider) on 1 April 2030 if there is a
holistic recapitalisation transaction unless:
§ such
transaction is implemented by way of a restructuring plan in which
the Interest Rate and Index Hedging Providers are a separate voting
class or classes of creditors (other than where all Class A
Creditors do not have a right to vote on the restructuring plan),
or
§ the
relevant Interest Rate and Index Hedging Provider provides its
consent to such transaction.
·
Interest Rate and Index Hedging Providers will
have the ability to transfer their Hedging Agreements without the
consent of TWUL (or, as applicable TWUF) following implementation
of a more holistic recapitalisation transaction (subject to the
transferee meeting minimum rating requirements of at least A-3 from
Moody's, A- from Fitch or A- from S&P).
A presentation summarising these
terms and setting out further information on the portfolio of
Interest Rate and Index Hedging Agreements can be found
here:
http://www.rns-pdf.londonstockexchange.com/rns/1042Q_1-2024-12-13.pdf
The terms of the Liquidity Extension
Transaction and Backstop Agreement announced on 25 October 2024 and
as set out in the PSL will only be amended as described above if
the Proposed Amendment is consented to by the requisite majority of
parties under the TSA. TWUL will update creditors if the Proposed
Amendment becomes effective.
In order to amend the TSA, consent
is required from:
·
Super Majority AHG Consenting Creditors (i.e. AHG
Members holding at least 75% of locked-up Class A debt held by all
AHG members);
·
Super Majority Bank Group Consenting Creditors
(i.e. bank group members holding at least 75% of locked-up debt
(i.e. locked-up Class A, Class B and swaps debt) held by the bank
group); and
·
Majority New Money Backstop Providers (i.e.
backstop providers holding at least 75% of the total backstop
commitments).
As at the date of this announcement
approximately 50% (AHG Members), in excess of 75% (bank group
members) and approximately 50% (backstop providers) respectively
have provided consent in principle and a process is ongoing to
facilitate the remaining consents.
If the Proposed Amendment is
implemented the terms of the Liquidity Extension Transaction as set
out in the PSL will, other than as described above, remain
unchanged.
Access to Documents
The proposed amendment to the TSA is
available through the website set up by Kroll Issuer Services
Limited (the "Lock-Up
Agent" and the "Information
Agent") at https://deals.is.kroll.com/thameswater.
The website is available to creditors and
prospective buyers, transferees, or sub-participants of that debt
(or similarly interested party). Creditors should contact the
Lock-Up Agent and Information Agent at thameswater@is.kroll.com
with questions on how to approve the amendment to
the TSA and/or accede to the TSA.
STAKEHOLDERS ARE ENCOURAGED TO REVIEW THE PROPOSED AMENDMENT
TO THE TSA IN DETAIL THEMSELVES (COPIES OF WHICH ARE AVAILABLE AT HTTPS://DEALS.IS.KROLL.COM/THAMESWATER)
AND SEEK THEIR OWN LEGAL AND FINANCIAL ADVICE[1] SHOULD THEY HAVE ANY QUERIES IN RELATION TO THEIR
CONTENTS.
For further information
Investor enquiries
Frederick Maroudas - Director of
Corporate Finance
debt.investorrelations@thameswater.co.uk
Media enquiries
Suvra Jans - Head of Media
Relations
suvra.jans@thameswater.co.uk
M: 07747 640 810
Information contained in this
announcement would have been deemed inside information for the
purposes of Article 7 of Regulation (EU) No 596/2014 as amended and
as it forms part of United Kingdom domestic law ("UK MAR") until
the release of this announcement. For the purpose of UK MAR and
Article 2 of Commission Implementing Regulating (EU) 2016/1055 as
it forms part of United Kingdom domestic law, this announcement is
made by Chris Weston (Director) at Thames Water Utilities
Limited.
LEI: 213800JKM5UQHFJOTZ25