Kemble Pushes Lenders for Standstill on £190M TL or Faces Administration; Options May Include 3-6 Month Maturity Extension With 5% Fee

Kemble Water Finance, Thames Water’s holding company, is pushing to secure a standstill with lenders of its £190 million term loan that falls due on April 30, sources told Reorg. If the debt liability is not extended or met, it will cause cross-acceleration and force the company into administration, they added.

Negotiations are moving and have a two-to-three-week timeline, sources said. Talks are likely to include an option to extend maturity for about three to six months for about a 5% fee, they said.

The current talks are part of a wider conversation concerning the company’s entire capital structure and a necessary debt restructuring. The shareholders are working with Alvarez & Marsal to assess options with Kemble’s creditors. Thames Water is working with Teneo and Rothschild about financing and restructuring options.

The £190 million term loan is quoted in the low 20s, according to sources, and is a potential trigger on the debt. Thames Water Utilities Ltd., or TWUL, has £1.3 billion in secured debts comprising secured loans and a £400 million senior secured bond at the Kemble level.

On March 28, the £400 million senior secured bond fell to 15/16, sources said, after shareholders announced they were unwilling to inject the first £500 million tranche of new equity as conditions of a support letter from July 2023 had not been met. The bond is quoted at about 18 today.

Ratings agencies downgraded TWUL’s and Kemble’s debt on Wednesday, April 3 and Thursday, April 4, respectively, stating Thames Water is unable to service its debt obligations particularly after the anticipated funding from shareholders was pulled.

The group’s capital structure is below:

The group’s corporate structure is below: