Thames Water must prepare to go cap in hand to investors for a cash fundraise as part of an agreement with the regulator designed to stabilise the embattled utility firm.
Britain’s biggest waster supplier, which is buried under a £15billion debt pile, breached the terms of its operating licence when S&P followed Moody’s with a rerating of Thames’ highest-ranked bonds to junk.
Industry watchdog Ofwat said today that Thames Water has agreed to remedying the breach, with a series of commitments it must stick to until it regains two investment grade credit ratings.
Thames Water earlier this year warned it only had enough liquidity to survive another 11 months
Ofwat said Thames Water must ‘take the steps required to deliver an equity raise’.
This may prove a difficult task for the group after investors publicly refused to inject more cash into Thames earlier this year.
Thames and other water firm’s have been allowed to hike customer bills for next year, amid concerns some firms are at risk of going bust.
Ofwat said Thames must now appoint new non-executive directors to its board, and develop a ‘suitable’ operational business plan to achieve turnaround.
The group has also agreed to be subject to an independent monitor, who will report back to Ofwat ‘frequently’ and will be entitled to access company information.
‘These commitments will remain in place until the company regains two investment grade credit ratings,’ Ofwat said.
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