An independent Monitor to report on the progress of Thames Water against its equity raise and transformation plans has been appointed by Ofwat.
L.E.K. Consulting has been appointed as the Monitor and will report back to Ofwat frequently as part of their activity.
The appointment of a Monitor was one of the key elements of the package of commitments from Thames Water, confirmed in August to remedy its licence breach on losing its investment grade credit ratings.
The commitments, including the Monitor, will remain in place until the company regains two investment grade credit ratings.
These enforceable commitments, known as ‘undertakings’ are offered by Thames Water to Ofwat pursuant to Section 19 of the Water Industry Act 1991. Paragraph 26 of Condition P of the Licence provides that:
“The Appointee (Thames Water) must ensure that it or any Associated Company which issues corporate debt on its behalf maintains, at all times, two Issuer Credit Ratings which are Investment Grade Ratings from two different Credit Rating Agencies, other than where Ofwat provides its written agreement for the Appointee to maintain only one Issuer Credit Rating which is an Investment Grade Rating.”
Ofwat announced its intention to appoint an independent Monitor to report on the company’s progress back in August.
The independent Monitor will report back to Ofwat frequently and be entitled to access to company information.
As of 31 July 2024, Thames Water does not hold any Issuer Credit Ratings which are Investment Grade Ratings.
Thames Water has committed to take “all reasonable steps” to address the concerns raised by its credit ratings agencies and to restore two Investment Grade Ratings.
Thames has committed to use “all reasonable endeavours to raise substantial equity investment into its business”, dedicate appropriate resources and take “all reasonable actions to establish long term financial resilience and with the objectives to deliver a successful outcome to the Equity Raise, to maintain access to debt capital markets and to ensure it has funding and plans in place to enable TWUL to meet its statutory and regulatory obligations over the long term.”
The Monitor will be providing a written report to Ofwat on a monthly basis with the first report to be submitted not later than one calendar month after the terms of appointment of the Monitor have been agreed.
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