- by Karma Loveday
Thames accepts independent monitoring after licence breach
Thames Water has put forward a series of commitments, including accepting an Ofwat-appointed independent monitor to scrutinise its activities, after falling foul of a licence requirement to hold two investment grade credit ratings.
Ofwat is consulting until 16 August on its provisional decision to accept these undertakings after Thames breached Condition P26 following a downgrade by Moody’s on 24 July and S&P on 31 July. The undertakings are in lieu of regulatory enforcement action.
Thames has made four principal commitments:
Independent monitor – Ofwat will be able to appoint an independent monitor with access to company information, to report back on Thames’ progress, including on its transformation plan and towards restoring the investment grade credit ratings and compliance with Condition P26. This was mooted as a possibility by Ofwat as part of the Turnaround Oversight Regime it unveiled alongside the PR24 Draft Determinations on 11 July.
Turnaround plan – To develop and deliver a business plan to achieve turnaround, secure access to investment markets and establish long term financial resilience. This is separate from Thames’ existing three-year operational turnaround plan which is focused on shorter term practical improvements.
Equity raise – Using all reasonable endeavours to raise equity, on a timetable agreed with Ofwat.
Board appointments – Appointing two new independent non-executive directors to oversee the equity raise, and a member of its senior leadership team to monitor compliance with the undertakings and liaise with both Ofwat and the independent monitor.
If Ofwat finalises its decision, the undertakings will remain in place until Thames regains two investment grade credit ratings.
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