Thames Water must turn to investors for cash, watchdog says

Thames Water must prepare to go all-in on investors to raise cash as part of a deal with the regulator designed to stabilise the troubled utility.

Britain’s biggest waste supplier, buried under £15bn of debt, breached the terms of its operating licence when S&P followed Moody’s and rated Thames’ top-ranking bonds as junk.

Industry watchdog Ofwat said today that Thames Water has agreed to remedy the breach, with a series of commitments it must meet until it regains two investment grade credit ratings.

Ofwat said Thames Water must “take the necessary steps to achieve a capital increase”.

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 companies have been allowed to increase customer bills for next year amid concerns that some firms are at risk of going bust.

Ofwat said Thames must now appoint new non-executive directors to its board and develop an “appropriate” operational business plan to achieve turnaround.

The group also agreed to be subject to an independent monitor, who will report to Ofwat “frequently” and have the right to access company information.

“These commitments will remain in place until the company regains two investment grade credit ratings,” Ofwat said.