Thames pauses bonus payments and Moody’s withdraws Kemble ratings

Thames Water will await guidance from Ofwat on the implementation of the Water (Special Measures) Act before paying retention bonuses. These would have amounted to 50% of senior executives’ salaries, financed by the recently-agreed emergency £3bn loan.

After meetings with Defra and environment secretary Steve Reed, the Thames board has agreed to pause progress on its senior managers’ retention scheme payments. Reed told Environment, Food and Rural Affairs (EFRA) Committee MPs on Tuesday that the company had been “calling their bonuses something different so they could continue to pay them”.

In a letter to the EFRA committee following Thames Water’s own evidence on 13 May, Thames chairman, Sir Adrian Montague, said "in the heat of the moment I may have misspoken" when he stated that the lenders had "insisted upon” the remuneration payments.

On Friday, EFRA Committee chair Alistair Carmichael wrote to Sir Adrian seeking further clarification by 30 May on whether he had in fact misspoken, and if so, exactly how and when he realised this. Carmichael also forwarded the 13 May transcript and said: “I would be grateful if you would review it and indicate in your reply any further areas of your evidence that may have been less than completely accurate.”

Carmichael also wrote on Friday to Thames chief executive Chris Weston, seeking details by 4 June on matters Thames promised to follow up on at the 13 May hearing, as well as: clarification on the matter of bonuses (“Have these bonuses been dropped or paused pending further consideration?”); details of Thames’ spend on legal fees and advertising; information on asset replacement rates; how Thames is planning to meet the sector commitment to end water poverty by 2030; and Thames’ data transparency arrangements.

• Moody's has withdrawn Thames Water (Kemble) Finance's backed senior secured rating of C on the £400m medium term notes due May 2026. Prior to the withdrawal, the outlook was stable. Moody’s explained it has insufficient or otherwise inadequate information to support the maintenance of the rating. At present it is unclear who the new owners of Kemble Water might be, given that KKR is undertaking due diligence as a preferred bidder. The ratings of Thames Water Utilities Ltd and Thames Water Utilities Finance were unaffected. A spokesman for Thames Water said there would be "no impact to Thames Water, its liquidity or the services it provides to customers," and it would continue to provide the information to Moody’s to support its other ratings.