Winding Up — Water bills will drown customers in the new year as Thames saga continues

Alessia Argentieri

20 December 2024•7 min read

Winding Up is 9fin's weekly newsletter, incorporating summaries and commentary from our European distressed coverage for the past week. Sign up for this newsletter here.

Although Christmas is already in the air and the holidays are approaching, this week we’ve had a very busy time in the restructuring world, with troubled UK waters once again under the spotlight.

On Tuesday (17 December) all eyed were on the courts following the latest developments on Thames Water. A group of company’s Class B noteholders announced it will challenge the Class A’s rescue loan proposal with a parallel restructuring plan. It would be the first time that a court considers a rival proposal since the introduction of the new UK restructuring procedure in 2020.

Meanwhile, the water utility firm was handed an £18.2m fine by UK regulator Ofwat for paying £158.3m in “unjustified” dividends to shareholders.

Thames Water will be allowed to increase consumer bills by 35% over the next five years. This means that water bills will rise by £152 for an average household, reaching £588 by 2030, plus further hikes that will be caused by inflation.

The biggest annual increase is expected next year, when bills will rise by 20% excluding inflation, with smaller percentage increases in each of the next four years – a tough pill to swallow just before Christmas for the 16 million customers of the water utility firm.

Source: Ofwat

Outside the courts, this week has been busy with news from numerous companies, including Irish packaging group Ardagh, Italian paper maker Pro-Gest, Hungarian fertiliser producer Nitrogenmuvek, and Southern Water, another British water company in trouble.

If you’d like to look back at a very busy year and read about the main trends and the hottest topics that kept us occupied in 2024, don’t miss our European Distressed Year in Review 2024, which has just been published. In January we’ll be back with another analysis focused on the 2025 outlook for the sector. Winding Up will also return in the new year, after two-week hiatus over the holidays.

In the meantime, let’s dig into this week’s news…

This week’s news

Ardagh — Two groups of bondholders of the Irish packaging company have elected to extend their cooperation agreements into the new year, but have excluded certain securities by recutting their agreements. One group, mainly representing unsecured notes maturing in 2027, is being advised by Akin Gump and PJT Partners, while a second group— representing a majority of SSNs maturing in 2026 and around 30% of SSNs maturing in 2027 and 2029 — is being advised by Gibson Dunn and Perella.

Colisee — The French care home operator restated its Q1 and Q2 24 results last week, cutting H1 EBITDA to €60m from €79m, after the company incorrectly calculated payroll expenses into working capital in the first half of the year.

Essity — An ad hoc bondholder group — which represents more than €270m across various Essity bonds — filed a lawsuit against the Swedish hygiene company last Friday, 13 December. The group is represented by White & Case and Houlihan Lokey, while Essity is being advised by Linklaters.

Foundever — Lenders to the US customer services company are considering joining a co-op draft presented by Gibson Dunn on Friday (13 December). Four European investors 9fin spoke to were keen to join up, but one investor said they think it’s “way too early” to sign a co-op, given the company has comfortable liquidity and isn’t near a CCC downgrade.

Global Switch — Certain bondholders of the British data center provider are informally seeking advice from restructuring advisors after the company reached an agreement to sell its Australian subsidiary, according to 9fin sources. The ad hoc group alleges that the sale of Global Switch Australia Holdings to asset manager HMC Capital would trigger an event of default.

Grover — The consumer electronics rental platform is struggling to extend its runway, and contemplating a debt restructuring. Former CEO and founder Michael Cassau has been pitching a turnaround plan to preserve value, but the firm’s troubles have already started to hurt performance of its asset-backed transactions.

Just Eat — An ad hoc group of bondholders of the food delivery company is considering signing a cooperation agreement, following Just Eat’s recent announcement of selling its US subsidiary Grubhub. Members of the group have organised with Milbank and Houlihan Lokey.

Intrum — The debt collector presented evidence in the Bankruptcy Court for the Southern District of Texas on Tuesday (17 December) to support confirmation of its plan, as well as defend against a motion to dismiss by the ad hoc group of Intrum AB 2025 noteholders, represented by Quinn Emanuel.

Nitrogenmuvek — The Hungarian fertiliser producer is working with Lazard and Linklaters to complete the refinancing of its €200m 7% senior notes due in May 2025, according to a company announcement. An ad hoc group of bondholders is working with Deloitte and Hogan Lovells, according to 9fin sources.

Pro-Gest — The Italian paper maker, which did not repay its €250m 3.25% Senior Notes that matured last week, expects to find an amend & extend agreement with its creditors that will include an extension to its debt maturities and a rearrangement of some terms, according to 9fin sources.

Southern Water — According to an announcement from Parliament, the UK water company will be the first to appear before Members of Parliament in the Environment, Food and Rural Affairs Committee (EFRA) on 21 January. Meanwhile, in its final determination published yesterday (19 December), Ofwat told the firm that a proposed £650m equity injection from sponsor Macquarie will need to be “greater” and arrive “sooner than” 2027.

Specialty Steel UK — A UK court has exceptionally allowed the company (a subsidiary of GFG Alliance) to convene six creditor meetings on an altered schedule, even thought it had not negotiated its restructuring plan with creditors before its launch.

Thames Water — In its final determination, UK water regulator Ofwat upheld a previously threatened fine of £141m and levied a further £18.2m fine against the water company over two dividend payments. Meanwhile, in the courts, a group of Class B noteholders announced the launch of a parallel restructuring plan to challenge the Class A‘s rescue loan proposal.

Tropicana — The juice producer is working with PJT Partners and Latham, according to sources, while lenders have started discussions informally with Gibson Dunn, as parties expect that Tropicana will be in need of additional bridge financing.