LONDON — LONDON (AP) — Thames Water, which serves 16 million customers in and around London, is seeking court approval for up to 3 billion pounds ($3.7 billion) of emergency funding to prevent the cash-strapped company from falling into government administration.
The High Court in London began a four-day hearing on the financing package on Monday, with Thames Water facing off against smaller creditors who complain that the deal is too expensive and favors bigger investors. Creditors holding about 90% of the company’s debt have already backed the deal.
Without the funding, Thames Water will run out of money in March, which could force the government to temporarily nationalize the company. Both the government and Thames Water say water will continue flowing to customers regardless of what happens.
Thames Water, which has about 17 billion pounds ($20.9 billion) of debt and has been repeatedly cited for illegal sewage spills, is at the center of a nationwide backlash over rising water bills as Britain seeks to modernize its water and sewage systems to cope with climate change and a growing population.
The company has been the focus of criticism from consumers and politicians who say Thames Water created its own problems by paying overly generous dividends to investors and high salaries to executives while failing to invest in pipelines, pumps and reservoirs. Company executives say the fault lies with regulators who kept bills too low for too long, starving the company of the cash it needed to fund improvements.
Ofwat, which regulates water companies in England and Wales, in December approved a 35% increase in Thames Water’s consumer charges over the next five years. The company argued that bills needed to rise 53% in order to finance needed projects and provide the financial returns necessary to attract investors.
The company has until Feb. 18 to appeal the decision.
