Thames Water will be able to go ahead with its £3 billion rescue loan after an appeal against this was rejected.
Thames Water says it needs this loan to enable it to proceed with a plan to restructure the company. Without it there was a strong possibility that the company would have to go into Special Administration, the system that was used for energy companies which went bust. They needed permission from the HIgh Court to take out the loan. This was opposed by a small group of investors and by Charlie Maynard, MP for Witney. They argued that the company should not be allowed to borrow the extra £3 billion on top of its existing indebtedness of nearly £20 billion on the grounds that this was throwing good money after bad, that the loan would only benefit existing shareholders and that most of it would be used for interest payments or advisor fees rather than for the investment that Thames Water desperately needs. It was reported that the interest rate on the new loan would be a punitive 9.5%.
The High Court decided to give permission for the loan but the objectors then appealed against the decision. The case was heard by the Court of Appeal last week and the court today handed down its judgement dismissing the appeal.
It is still possible in theory that the objectors could make a further appeal to the Supreme Court but in order to do so they would need first to petition that court for leave to appeal - in other words show that there was a legal principle at stake that was sufficiently important to justify a further hearing.
At the time of writing the court has issued its decision but has not yet released its detailed explanation for the ruling.
** The BBC is this evening broadcasting the first of two documentaries called Thames Water: Inside the Crisis. It should make interesting viewing. BBC2, 9pm.
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