Thames Water Utilities Limited STID Proposal Launch Announcement

RNS Number : 7387J

Thames Water Utilities Limited

25 October 2024

 

THAMES WATER UTILITIES FINANCE PLC ANNOUNCES A CONSENT SOLICITATION

 

25 October 2024

Overview

Thames Water Utilities Finance plc (the "Issuer") has today announced a consent solicitation in respect of the following series and sub-class, as applicable, of bonds (the "Bonds") issued by the Issuer, each as guaranteed by Thames Water Utilities Holdings Limited and Thames Water Utilities Limited:

(i)         CAD250,000,000 2.875 per cent. Class A Guaranteed Unwrapped Bonds due 12 December 2024 (CAG8787NAB06);

(ii)        £500,000,000[1] 4 per cent. Class A Guaranteed Unwrapped Bonds due 19 June 2025 (XS1078777114);

(iii)       €650,000,000 4 per cent. Class A Green Unwrapped Bonds due 18 April 2027 (XS2576550326);

(iv)       £45,000,000 0.721 per cent. Index Linked Class A Unwrapped Bonds due 21 December 2027 (XS1335311574);

(v)        US$40,000,000 1.604 per cent. Class A Unwrapped Bonds due 23 December 2027 (XS2278588343);

(vi)       €575,000,000 0.875 per cent. Class A Green Unwrapped Bonds due 31 January 2028 (XS2438026440);

(vii)      £300,000,000 3.5 per cent. Class A Guaranteed Unwrapped Bonds due 25 February 2028 (XS1371533867);

(viii)     £330,000,000 6.75 per cent. Guaranteed Bonds due 16 November 2028 (XS0092157600);

(ix)       US$57,000,000 2.06 per cent. Class A Guaranteed Unwrapped Bonds due 12 November 2030 (XS2254339331);

(x)        €1,000,000,000 4.375 per cent. Class A Green Unwrapped Bonds due 18 January 2031 (XS2576550672);

(xi)       £275,000,000 7.125 per cent. Class A Unwrapped Bonds due 30 April 2031 (XS2755443020);

(xii)      £250,000,000 2.625 per cent. Class A Guaranteed Unwrapped Bonds due 24 January 2032 (XS1555168365);

(xiii)     €575,000,000 1.250 per cent. Class A Green Unwrapped Bonds due 31 January 2032 (XS2438026366);

(xiv)     £200,000,000 6.5 per cent. Guaranteed Bonds due 9 February 2032 (XS0107289323);

(xv)      £300,000,000 4.375 per cent. Class A Guaranteed Unwrapped Bonds due 3 July 2034 (XS0800185174);

(xvi)     £40,000,000 0.75 per cent. Index Linked Class A Bonds due 18 December 2034 (XS1334772925);

(xvii)    £600,000,000 5.125 per cent. Guaranteed Notes due 28 September 2037 (XS0268693743);  

(xviii)    JPY 20,000,000,000 3.28 per cent. Fixed Rate Class A Unwrapped Bonds due 20 August 2038 (XS0382041225);

(xix)     £350,000,000 Class A 2.375 per cent. Guaranteed Unwrapped Bonds due 22 April 2040 (XS2161831776);

(xx)      £300,000,000 8.250 per cent. Class A Unwrapped Bonds due 25 April 2040 (XS2707822644);

(xxi)     £50,000,000 3.853 per cent. Sub-Class A1 Index-Linked Unwrapped Bonds due 15 December 2040 (XS0404852526);

(xxii)    £500,000,000 5.50 per cent. Class A Guaranteed Unwrapped Bonds due 11 February 2041 (XS0590171103);

(xxiii)    £50,000,000 1.98 per cent. Sub-Class A5 Index-Linked Unwrapped Bonds due 28 August 2042 (XS0318577912);

(xxiv)   £55,000,000 2.091 per cent. Class A Guaranteed Unwrapped Index-Linked Bonds due 6 October 2042 (XS0455926260);

(xxv)    £575,000,000 7.750 per cent. Class A Unwrapped Bonds due 30 April 2044 (XS2755443376);  

(xxvi)   £40,000,000[2] 1.974 per cent. Class A Guaranteed Unwrapped Index-Linked Bonds due 12 October 2045 (XS0548262061);

(xxvii)   £300,000,000 4.625 per cent. Class A Guaranteed Unwrapped Bonds due 4 June 2046 (XS0800186222);

(xxviii)  £100,000,000 1.846 per cent. Sub-Class A4 Index-Linked Unwrapped Bonds due 28 August 2047 (XS0318577755);

(xxix)   £200,000,000 1.819 per cent. Sub-Class A3 Index-Linked Unwrapped Bonds due 28 August 2049 (XS0318577672);

(xxx)    £40,000,000 Class A 2.442 per cent. Guaranteed Unwrapped Bonds due 12 May 2050 (XS2168290000);

(xxxi)   £300,000,000 1.6802 per cent. Guaranteed RPI-Linked Notes due 11 July 2053 (XS0265832922);

(xxxii)   £300,000,000 1.681 per cent. Guaranteed RPI-Linked Notes due 11 July 2055 (XS0267219896);

(xxxiii)  £200,000,000 1.771 per cent. Sub-Class A2 Index-Linked Unwrapped Bonds due 28 August 2057 (XS0318577599);

(xxxiv)  £400,000,000 7.738 per cent. Guaranteed Class A Unwrapped Bonds due 9 April 2058 (XS1537083716); and

(xxxv)  £350,000,000 1.76 per cent. Sub-Class A1 Index-Linked Unwrapped Bonds due 28 August 2062 (XS0318577326).

Capitalised terms used in this announcement and not defined herein shall have the meanings ascribed to them in the Solicitation Memorandum dated 25 October 2024 (the "Solicitation Memorandum").

Meetings of Bondholders

The following meetings of Bondholders which have been convened in respect of each series and sub-class, as applicable, of Bonds as listed in the table below in each case to consider, and if thought fit, pass the applicable Extraordinary Resolutions to approve the relevant Proposals and their implementation, shall take place at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ and at the times indicated in the table below:

ISIN	Description of Bond	Applicable Time[3] (London time)
CAG8787NAB06	CAD250,000,000 2.875 per cent. Class A Guaranteed Unwrapped Bonds due 12 December 2024	9:30 a.m.
XS1078777114	£500,000,000 4 per cent. Class A Guaranteed Unwrapped Bonds due 19 June 2025	9:35 a.m.
XS2576550326	€650,000,000 4.000 per cent. Class A Green Unwrapped Bonds due 18 April 2027	9:40 a.m.
XS1335311574	£45,000,000 0.721 per cent. Index Linked Class A Unwrapped Bonds due 21 December 2027	9:45 a.m.
XS2278588343	US$40,000,000 1.604 per cent. Class A Unwrapped Bonds due 23 December 2027	9:50 a.m.
XS2438026440	€575,000,000 0.875 per cent. Class A Green Unwrapped Bonds due 31 January 2028	9:55 a.m.
XS1371533867	£300,000,000 3.5 per cent. Class A Guaranteed Unwrapped Bonds due 25 February 2028	10:00 a.m.
XS0092157600	£330,000,000 6.75 per cent. Guaranteed Bonds due 16 November 2028	10:05 a.m.
XS2254339331	US$57,000,000 2.06 per cent. Class A Guaranteed Unwrapped Bonds due 12 November 2030	10:10 a.m.
XS2576550672	€1,000,000,000 4.375 per cent. Class A Green Unwrapped Bonds due 18 January 2031	10:15 a.m.
XS2755443020	£275,000,000 7.125 per cent. Class A Unwrapped Bonds due 30 April 2031	10:20 a.m.
XS1555168365	£250,000,000 2.625 per cent. Class A Guaranteed Unwrapped Bonds due 24 January 2032	10:25 a.m.
XS2438026366	€575,000,000 1.250 per cent. Class A Green Unwrapped Bonds due 31 January 2032	10:30 a.m.
XS0107289323	£200,000,000 6.5 per cent. Guaranteed Bonds due 9 February 2032	10:35 a.m.
XS0800185174	£300,000,000 4.375 per cent. Class A Guaranteed Unwrapped Bonds due 3 July 2034	10:40 a.m.
XS1334772925	£40,000,000 0.75 per cent. Index Linked Class A Bonds due 18 December 2034	10:45 a.m.
XS0268693743	£600,000,000 5.125 per cent. Guaranteed Notes due 28 September 2037	10:50 a.m.
XS0382041225	JPY 20,000,000,000 3.28 per cent. Fixed Rate Class A Unwrapped Bonds due 20 August 2038	10:55 a.m.
XS2161831776	£350,000,000 Class A 2.375 per cent. Guaranteed Unwrapped Bonds due 22 April 2040	11:00 a.m.
XS2707822644	£300,000,000 8.250 per cent. Class A Unwrapped Bonds due 25 April 2040	11:05 a.m.
XS0404852526	£50,000,000 3.853 per cent. Sub-Class A1 Index-Linked Unwrapped Bonds due 15 December 2040	11:10 a.m.
XS0590171103	£500,000,000 5.50 per cent. Class A Guaranteed Unwrapped Bonds due 11 February 2041	11:15 a.m.
XS0318577912	£50,000,000 1.98 per cent. Sub-Class A5 Index-Linked Unwrapped Bonds due 28 August 2042	11:20 a.m.
XS0455926260	£55,000,000 2.091 per cent. Class A Guaranteed Unwrapped Index-Linked Bonds due 6 October 2042	11:25 a.m.
XS2755443376	£575,000,000 7.750 per cent. Class A Unwrapped Bonds due 30 April 2044	11:30 a.m.
XS0548262061	£40,000,000 1.974 per cent. Class A Guaranteed Unwrapped Index-Linked Bonds due 12 October 2045	11:35 a.m.
XS0800186222	£300,000,000 4.625 per cent. Class A Guaranteed Unwrapped Bonds due 4 June 2046	11:40 a.m.
XS0318577755	£100,000,000 1.846 per cent. Sub-Class A4 Index-Linked Unwrapped Bonds due 28 August 2047	11:45 a.m.
XS0318577672	£200,000,000 1.819 per cent. Sub-Class A3 Index-Linked Unwrapped Bonds due 28 August 2049	11:50 a.m.
XS2168290000	£40,000,000 Class A 2.442 per cent. Guaranteed Unwrapped Bonds due 12 May 2050	11:55 a.m.
XS0265832922	£300,000,000 1.6802 per cent. Guaranteed RPI-Linked Notes due 11 July 2053	12:00 p.m.
XS0267219896	£300,000,000 1.681 per cent. Guaranteed RPI-Linked Notes due 11 July 2055	12:05 p.m.
XS0318577599	£200,000,000 1.771 per cent. Sub-Class A2 Index-Linked Unwrapped Bonds due 28 August 2057	12:10 p.m.
XS1537083716	£400,000,000 7.738 per cent. Guaranteed Class A Unwrapped Bonds due 9 April 2058	12:15 p.m.
XS0318577326	£350,000,000 1.76 per cent. Sub-Class A1 Index-Linked Unwrapped Bonds due 28 August 2062	12:20 p.m.

 

Bondholders who do not wish to attend the relevant Meeting but who wish to vote must take action prior to 4.00 p.m. (London time) on 13 November 2024 (the "Expiration Time"), subject to amendment termination or withdrawal by the Issuer and any earlier deadlines set by the Clearing Systems or any intermediary through which such Bondholders hold their Bonds.

Background and The Proposals

(1)  Interim RP Launch Waiver

(i)         As at 30 June 2024, the TWU Financing Group had total liquidity of £1,809 million, comprising available cash of £1,513 million and undrawn committed bank facilities of £296 million.

(ii)        TWUL announced that Trigger Events had occurred on 9 July 2024 and, as a result of the continuation of these Trigger Events, the TWU Financing Group is not permitted to incur Financial Indebtedness under limb (j) of the definition of Permitted Financial Indebtedness, other than Qualifying Indebtedness (which, in summary, is limited to drawdowns, extensions and rollovers under existing Authorised Credit Facilities). As a result, the TWU Financing Group is currently significantly constrained in its ability to raise Financial Indebtedness.

(iii)       As more fully set out in the relevant STID Proposal, TWUL has been engaging with its creditors to seek to extend its liquidity runway. As part of these discussions, TWUL has identified a potential solution to extend its liquidity runway through raising Financial Indebtedness under super senior financing and extending maturity and amortisation dates under the Senior Debt (the "Interim Recapitalisation Transaction").

(iv)       To facilitate implementation of the Interim Recapitalisation Transaction the TWU Financing Group is required to take certain actions (the "Proposed Steps"). The Proposed Steps are:

(a)  Thames Water Utilities Holdings Limited ("TWH") proposing (and, if approved in accordance with its terms by the required majorities of creditors, implementing) a restructuring plan under Part 26A of the Companies Act 2006 in order to implement the required amendments, waivers and consents under the Finance Documents for the Interim Recapitalisation Transaction (the "Interim Restructuring Plan");

(b)  TWH entering into a deed of contribution in favour of TWUL and TWUF to facilitate the Interim Restructuring Plan (the "Deed of Contribution"), pursuant to which TWH will undertake to pay TWUL and TWUF (by way of contribution) an amount equal to its share of any payment made by TWUL or TWUF in respect of any liability under the Senior Debt and Subordinated Debt. TWH, while already a guarantor of the relevant liabilities will in substance, become a primary obligor, as a result of the Deed of Contribution; and

(c)  the TWU Financing Group progressing a transaction support agreement entered into between, among others, TWUL and certain of its Secured Creditors on the date of the STID Proposals (the "Transaction Support Agreement", which reference includes the Transaction Support Agreement as amended from time to time) to evidence the support of such Secured Creditors for the Interim Recapitalisation Transaction on the terms specified therein.

(v)        TWUL considers that none of the Proposed Steps are restricted under the Finance Documents or would result in a Default or Event of Default until a claim form is filed with the court in respect of the Interim Restructuring Plan. Nevertheless, TWUL recognises that the Proposed Steps need to occur to initiate the Interim Recapitalisation Plan and is therefore requesting a waiver of any Defaults or Events of Default which would occur directly as a consequence of the Proposed Steps (subject to the Waiver Conditions as defined and described below) being initiated.

(vi)       TWUL believes that this waiver would be beneficial to Secured Creditors to enable the initiation of the Interim Restructuring Plan, which itself is intended to improve the financial resilience of the TWU Financing Group.

(vii)      For the avoidance of doubt, approval of the consents and waivers proposed in the STID Proposals shall in no way constitute an approval of the terms and conditions of the Interim Recapitalisation Transaction or the Interim Restructuring Plan which will be sought separately in accordance with their terms.

(2)  Reserve Account Restricted Cash Release Waiver

(i)         As more fully set out in the relevant STID Proposal, as at the date hereof, the TWU Financing Group holds approximately £341.79 million of cash in aggregate in the O&M Reserve Account, the Class A Debt Service Reserve Account and the Class B Debt Service Reserve Account (the "Restricted Reserve Accounts").

(i)         Debt Service Reserve Account: Pursuant to paragraph 4 (DSR Liquidity Facility) of Part 2 (Financial Covenants) of Schedule 4 (Covenants) to the CTA, TWUF must maintain one or more DSR Liquidity Facilities available for drawing which, when aggregated with all amounts (including the value of any Authorised Investments) standing to the credit of the Debt Service Reserve Accounts of TWUF are not less than the cash amount of interest (including Lease Reserve Amounts and Adjusted Lease Reserve Amounts) payable on the Class A Debt, the Unsecured TWUF Bond Debt and the Class B Debt for the next succeeding 12 month period (after taking into account the impact on interest rates of such Class A Debt, the Unsecured TWUF Bond Debt and Class B Debt of any Hedging Agreement then in place).

Further, pursuant to paragraph 12 (Debt Service Reserve Account) of Schedule 11 (Cash Management) to the CTA, TWUF may only withdraw amounts from the Debt Service Reserve Accounts in limited circumstances - most relevantly, to cover a shortfall in respect of certain specified items in the Payment Priorities on a Payment Date.

(ii)        O&M Reserve Account: Pursuant to paragraph 5 (O&M Reserve/O&M Reserve Facility) of Part 2 (Financial Covenants) of Schedule 4 (Covenants) to the CTA, TWUF must at all times maintain an O&M Reserve and/or an O&M Reserve Facility available for drawing which, when aggregated with amounts (including the value of any Authorised Investments funded from O&M Reserve Accounts) standing to the credit of any O&M Reserve Account, amount to not less than 10 per cent. of Projected Operating Expenditure and Capital Maintenance Expenditure required for the forthcoming Test Period as determined on 31 March in each year in its budget for that Test Period.

Pursuant to paragraphs 8 (TWUL's O&M Reserve Account) and 11 (Issuer's O&M Reserve Account) of Schedule 11 (Cash Management) to the CTA, there is a restriction on drawing monies from the O&M Reserve Account except in limited circumstances - most relevantly, to pay operating and Capital Expenditure where it cannot be met from existing balances in the Operating Accounts.

(ii)       In order to provide additional available liquidity for the TWU Financing Group, TWUL is seeking to:

(i)        have the right to withdraw cash from the Restricted Reserve Accounts at any time and to use that cash towards the general corporate purposes or general working capital of the TWU Financing Group without any other restrictions under the Finance Documents on use or withdrawal except the Reserve Account Continuing Cash Release Restrictions (as defined and explained below); and

(ii)        waive any Default or Event of Default which would occur as a result of a breach of the maintenance requirements in paragraphs 4 and 5 of Part 2 (Financial Covenants) of Schedule 4 (Covenants) to the CTA which is directly caused by such a withdrawal from and use of cash from the Restricted Reserve Accounts,

(together, the "Reserve Account Restricted Cash Release"). The "Reserve Account Continuing Cash Release Restrictions" are: (i) TWUL and TWUF may not withdraw or use cash from the Restricted Reserve Accounts to fund any Restricted Payments (without limiting any restriction under the Finance Documents or Transaction Support Agreement which prohibits or restricts Restricted Payments); and (ii) TWUL and TWUF may not withdraw or use cash from the Restricted Reserve Accounts which has been funded by a Standby Drawing to the extent restricted by the terms of the relevant Liquidity Facility.

(iii)       The effect of the Reserve Account Restricted Cash Release on the cash management of the TWU Financing Group would operate as follows:

(i)         on each Payment Date, the Obligors would continue to apply monies credited to the Debt Service Payment Account in accordance with the Payment Priorities and would make all transfers to the Debt Service Payment Account from the Operating Accounts or the Restricted Reserve Accounts at the times and in the amounts required by the cash management provisions in Schedule 11 (Cash Management) to the CTA;

(ii)         to the extent that an Obligor is required to make a transfer to a Restricted Reserve Account pursuant to the Payment Priorities (for example, but without limitation, where required by paragraph 9.3(x) of Schedule 11 (Cash Management) to the CTA to top up to the Class A Required Balance) such transfers will be made to the relevant Restricted Reserve Account; and

(iii)        once the funds are so transferred as contemplated by paragraph (iii)(ii) above, they can be withdrawn on any date from the relevant Restricted Reserve Account to be applied towards the general corporate purposes or general working capital of the TWU Financing Group (subject to the Reserve Account Continuing Cash Release Restrictions).

(iv)       TWUL is requesting a waiver of the obligations of the TWU Financing Group to satisfy the maintenance requirements as set out in paragraphs 4 (DSR Liquidity Facility) and 5 (O&M Reserve/O&M Reserve Facility) of Part 2 (Financial Covenants) of Schedule 4 (Covenants) to the CTA, to comply with the withdrawal restrictions in paragraphs 8 (TWUL's O&M Reserve Account), 11 (Issuer's O&M Reserve Account) and 12 (Debt Service Reserve Accounts) of Schedule 11 (Cash Management) to the CTA and the Defaults or Events of Default which would occur under paragraph 2 (Breach of other obligations) of Part 2 (Events of Default (TWUL, TWUF and the Issuer)) of Schedule 6 (Events of Default) to the CTA, in each case, where the applicable non-compliance arises directly as a consequence of the Reserve Account Restricted Cash Release.

(v)        TWUL believes that these waivers would be beneficial to Secured Creditors, as it would improve the financial resilience of the TWU Financing Group and frees up additional liquidity for the implementation of the Proposed Steps.

(3)  Compensation Account Restricted Cash Release Waiver

(i)        As more fully set out in the relevant STID Proposal, as at the date hereof, the TWU Financing Group may be required to transfer approximately £65 million of cash to the Compensation Account (the "Compensation Account") in the coming months.

(ii)       Pursuant to paragraph 9(b) of Schedule 7 (Hedging Policy and Overriding Provisions Relating to Hedging Agreements) to the CTA (replicated in each Hedging Agreement), within three months of receipt of a notice of termination from a Hedge Counterparty (of the type described in paragraph 9(b) of Schedule 7 (Hedging Policy and Overriding Provisions Relating to Hedging Agreements) to the CTA), TWUL is required to use all reasonable endeavours to either:

(i)         enter into a new, replacement swap transaction; or

(ii)         deposit an amount in the Compensation Account which TWUL estimates, in its reasonable opinion, is equal to the net amount payable to the Hedge Counterparty on termination.

(iii)       TWUL received such a termination notice from one of its Hedge Counterparties dated 27 August 2024 and accordingly is required to use all reasonable endeavours to either enter into a new, replacement swap transaction, or deposit amounts into the Compensation Account.

(iv)      Pursuant to paragraph 13 of Schedule 11 (Cash Management) to the CTA, TWUL may only withdraw amounts from the Compensation Account to meet termination sums due under the relevant Hedging Agreement. The Compensation Account is subject to Security in favour of all Secured Creditors, not just the relevant Hedge Counterparty.

(v)       In order to provide additional available liquidity for the TWU Financing Group, TWUL is seeking to:

(i)         have the right to withdraw cash from the Compensation Account at any time and to use that cash towards the general corporate purposes or general working capital of the TWU Financing Group without any other restrictions under the Finance Documents on use or withdrawal except the Compensation Account Continuing Cash Release Restrictions (as defined and explained below); and

(ii)        to waive any Default or Event of Default which is directly caused by such withdrawal from and use of cash from the Compensation Account,

(together, the "Compensation Account Restricted Cash Release"). The "Compensation Account Continuing Cash Release Restrictions" are that TWUL and TWUF may not withdraw or use cash from the Compensation Account to fund any Restricted Payments (without limiting any restriction under the Finance Documents or Transaction Support Agreement which prohibits or restricts Restricted Payments).

(vi)       As such, TWUL is requesting a waiver of:

(i)         any requirement to only withdraw amounts standing to the credit of the Compensation Account for the purposes specified in paragraph 13 (Compensation Account) of Schedule 11 (Cash Management) to the CTA (but without prejudice to any requirement to make payment to the Compensation Account in accordance with the Payment Priorities) so as to permit the Compensation Account Restricted Cash Release (subject to the Compensation Account Continuing Cash Release Restrictions); and

(ii)        any Default or Event of Default which occurs under paragraph 2 (Breach of other obligations) of Part 2 (Events of Default (TWUL, TWUF and the Issuer)) of Schedule 6 (Events of Default) to the CTA in respect of the covenant in paragraph 13 (Compensation Account) of Schedule 11 (Cash Management) to the CTA directly as a consequence of the Compensation Account Restricted Cash Release.

(vii)      In terms of the effects of the Compensation Account Restricted Cash Release on the cash management of the TWU Financing Group, TWUL or TWUF would continue to make any payments, deposits or transfers to the Compensation Account to the extent required by the Finance Documents (for example, pursuant to the Payment Priorities). Once the funds are so paid, deposited or transferred, they can be withdrawn on any date from the Compensation Account to be applied towards the general corporate purposes or general working capital of the TWU Financing Group (subject to the Compensation Account Continuing Cash Release Restrictions).

(viii)     TWUL believes that this waiver would be beneficial to Secured Creditors, as it would improve the financial resilience of the TWU Financing Group and frees up additional liquidity for the implementation of the Proposed Steps.

(4)  September Interim Accounts Waiver

(i)         As more fully set out in the relevant STID Proposal, pursuant to paragraph 1 (Financial Statements) of Part 1 (Information Covenants) of Schedule 4 (Covenants) to the CTA the Obligors are required to supply to the Security Trustee their unaudited interim financial statements within five Business Days of the date upon which they are available, and in any event within 90 days of the end of the relevant financial period to which they relate. In respect of their unaudited interim financial statements for the period ending 30 September 2024 (the "September Interim Accounts"), the Obligors must provide the September Interim Accounts by no later than 29 December 2024.

(ii)        Given the current liquidity runway discussions which TWUL is seeking to address with the Interim Recapitalisation Transaction, TWUL is proposing that the Obligors do not deliver the September Interim Accounts at all.

(iii)       TWUL is requesting a waiver of the requirement to deliver the September Interim Accounts pursuant to paragraph 1 (Financial Statements) of Part 1 (Information Covenants) of Schedule 4 (Covenants) to the CTA and any Default or Event of Default which would occur under paragraph 2 (Breach of other obligations) of Part 2 (Events of Default (TWUL, TWUF and the Issuer)) of Schedule 6 (Events of Default) directly as a consequence of the non-delivery of the September Interim Accounts.

(iv)       TWUL believes that this waiver would be beneficial to Secured Creditors, to enable management time to focus on and prioritise the Interim Recapitalisation Transaction and ancillary workstreams. The next financial statements, being the audited financial statements for the financial year ended 31 March 2025 are intended be delivered in accordance with the CTA following the intended Interim Recapitalisation Transaction.

(v)        For the avoidance of doubt, the proposed waiver of the requirement to deliver the September Interim Accounts shall not affect or waive the requirement for the Issuer, TWUL and TWUF to deliver a Compliance Certificate within five Business Days of the date upon which its interim financial statements are available and, in any event, no later than 29 December 2024 (the "Interim Compliance Certificate") as required pursuant to paragraph 2 (Compliance Certificate) of Part 1 (Information Covenants) to Schedule 4 (Covenants) to the CTA, nor the requirement for TWUL to provide an investor report pursuant to paragraph 5 (Investors Report) of Part 1 (Information Covenants) to Schedule 4 (Covenants) to the CTA (with such investor report to be made available in the same manner as the prior investor reports on the TWU Financing Group's website). All applicable financial ratios will continue to be tested.

For detailed information on the Proposals, including the Proposed Steps to facilitate the implementation of the Interim Recapitalisation Transaction, the effect of the Reserve Account Restricted Cash Release and the Compensation Account Restricted Cash Release on the cash management of the TWU Financing Group and the September Interim Accounts Waiver, see the STID Proposals. For the avoidance of doubt, the approval of one of the STID Proposals is not conditional on all STID Proposals being approved.

Waiver Conditions

If approved pursuant to the applicable STID Proposal, each relevant waiver shall apply on and from the date on which the Waiver Letter is executed, but the continued application of each approved waiver is subject to the conditions specified below:

(i)         the Interim RP PSL being issued on or before 27 November 2024; and

(ii)        the "Effective Date Conditions" to the Transaction Support Agreement having been satisfied on or before 27 November 2024, and the Transaction Support Agreement not being terminated at any time pursuant to clauses 15.1 (Automatic termination) (other than for the Transaction Effective Date as defined in the Transaction Support Agreement), 15.2 (Termination by agreement) (other than where the Transaction Support Agreement has been terminated and replaced by a transaction support agreement that has been entered into by the Approving Parties as defined in the Transaction Support Agreement), 15.3 (Termination by the Majority Class A Consenting Creditors) or 15.4 (Termination by the Company Parties) of the Transaction Support Agreement,

(the "Waiver Conditions"). The "Interim RP PSL" means a letter prepared in accordance with the Chancery Division High Court Practice Statement (Companies: Schemes of Arrangement under Part 26 and Part 26A of the Companies Act 2006) issued on 26 June 2020 to be sent to all creditors and shareholders who will be affected by the Interim Restructuring Plan informing them of the proposed Interim Restructuring Plan and the proposed convening hearing.

Without prejudice to the Waiver Conditions, the approval of a waiver is not conditional on the approval of any other waiver; therefore, for example, if the Majority Creditors approve the Interim RP Launch Waiver but do not approve the Reserve Account Restricted Cash Release Waiver, the Compensation Account Restricted Cash Release Waiver or the September Interim Accounts Waiver, the Interim RP Launch Waiver must still be implemented (and, in this regard, each waiver shall be treated as a separate STID Proposal (within the meaning given in the MDA)).

No fee will be payable in connection with the Consent Solicitation.

Transaction Support Agreement

In parallel with these STID Proposals, the TWU Financing Group has entered into the Transaction Support Agreement to help secure support for the Interim Recapitalisation Transaction. By approving these STID Proposals a Qualifying Class A Secured Creditor does not automatically accede to the Transaction Support Agreement.

 

Expected Timetable

Event		Date
Announcement of Proposals, delivery of the STID Proposals and Notice of Meetings given to Bondholders through the Clearing Systems.		25 October 2024
Solicitation Memorandum to be made available at the specified offices of the Tabulation Agent and the Canadian Information and Tabulation Agent (copies of which are obtainable by Bondholders upon request, free of charge).
Expiration Time: Latest time and date for (i) receipt of valid Electronic Voting Instructions by the Tabulation Agent and the Canadian Tabulation Agent through the Clearing Systems (such Electronic Voting Instructions are irrevocable from this date), (ii) obtaining a voting certificate from the Principal Paying Agent and for the issuance or revocation of a voting instruction given other than by way of an Electronic Voting Instruction and (iii) making other arrangements to be represented or to attend and vote at the Meeting(s) or an adjourned Meeting.		4.00 p.m. (London time) on 13 November 2024
Time and date of the Meetings.		First meeting commencing at 9:30 a.m. (London time) on 18 November 2024. Time of each Meeting as set out in the Notice of Meetings
Notice of results of the Meetings to be given to Bondholders through the Clearing Systems.		Promptly following conclusion of the Meetings on 18 November 2024
STID Voting Deadline		2 December 2024
Announcement of results in respect of the STID Proposals		2 December 2024 or earlier, subject to the STID Proposals, should the Security Trustee have received votes in favour of the STID Proposals from DIG Representatives representing more than 50% of the total Outstanding Principal Amount of Qualifying Class A Debt
Delivery of Waiver Letter		Promptly following announcement of the approval in respect of the relevant STID Proposal

All of the above dates are subject to earlier deadlines that may be set by the Clearing Systems or any intermediary.

General

Subject to applicable law and as provided herein, the Issuer may, in its sole discretion, amend the terms of (save for the terms of the Extraordinary Resolutions or to bring forward the Expiration Time), terminate or withdraw the Consent Solicitation at any time up to the Solicitation Amendment Deadline.

Bondholders or Beneficial Owners are advised to check with the bank, securities broker, trust company, custodian, Clearing System or other intermediary through which they hold their Bonds whether such intermediary will apply different deadlines for participation to those set out in the Solicitation Memorandum and, if so, should adhere to such deadlines if such deadlines are prior to the deadlines set out in the Solicitation Memorandum.

In relation to the delivery or revocation of Electronic Voting Instructions, in each case, through the Clearing Systems, Bondholders holding Bonds in CDS, Euroclear or Clearstream, Luxembourg should note the particular practice of the relevant Clearing System, including any earlier deadlines set by such Clearing System.

Only direct accountholders in CDS, Euroclear or Clearstream, Luxembourg may deliver Electronic Voting Instructions. Bondholders who are not direct accountholders in CDS, Euroclear or Clearstream, Luxembourg should arrange for the accountholder through which they hold their Bonds to deliver an Electronic Voting Instruction on their behalf to the relevant Clearing System as more particularly described in the Solicitation Memorandum. The deadlines specified by the relevant Clearing System may be earlier than the Expiration Time.

Bondholders are advised to read carefully the Solicitation Memorandum for full details of and information on the procedures for participating in the Consent Solicitation.

A complete description of the terms and conditions of the Consent Solicitation will be set out in the Solicitation Memorandum.

For Further Information:

Further details on the Consent Solicitation and copies of the Solicitation Memorandum can be obtained from:

The Tabulation Agent

Kroll Issuer Services Limited

The Shard
32 London Bridge Street
London SE1 9SG

[e-mail]

https://deals.is.kroll.com/thameswater

Tel: [phone]

The Canadian Tabulation Agent

TSX Trust Company
301-100 Adelaide St W,
Toronto ON
M5H4H1
Attention: Emma McKenzie
Email: [e-mail]

Tel: [phone]

 

The Canadian Information Agent

TMX Investor Solutions Inc.

301-100 Adelaide St W,
Toronto ON
M5H4H1

Attention: Renata Dzuba
Email: [e-mail]

 

 

Disclaimer

This announcement must be read in conjunction with the Solicitation Memorandum. The Solicitation Memorandum contains important information which should be read carefully before any decision is made with respect to the Consent Solicitation. If any Bondholder is in doubt as to the action it should take, it is recommended to seek its own financial advice, including as to any tax consequences, from its stockbroker, bank manager, solicitor, accountant, independent financial adviser authorised under the Financial Services and Markets Act 2000 (if in the United Kingdom) or other appropriately authorised financial adviser. Any individual or company whose Bonds are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to participate in the Consent Solicitation. This announcement is issued by Thames Water Utilities Limited. None of the Tabulation Agent, Canadian Tabulation Agent, the Security Trustee or the Bond Trustee accepts any responsibility for the contents of this announcement.

This announcement is released by Thames Water Utilities Limited and contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of the domestic law of the United Kingdom by virtue of The European Union (Withdrawal) Act 2018 ("UK MAR"), encompassing information relating to the Proposals described above. For the purposes of UK MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055 as it forms part of the domestic law of the United Kingdom by virtue of The European Union (Withdrawal) Act 2018, this announcement is made by Andy Frasier (Company Secretary) at Thames Water Utilities Limited.

Legal Entity Identifier Number:

Thames Water Utilities Finance Plc - 213800SKZTSE2L1BII69

 

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[1]    As of the date of this Announcement, £314,473,000 is currently outstanding.

[2]    As of the date of this Announcement, £30,572,761.57 is currently outstanding. 

[3]    The Applicable Time will be as set out in this column or as soon as possible thereafter as the immediately preceding Meeting of holders of the Bonds shall have been concluded or adjourned.

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