Scrutiny of Thames Water, the crisis-hit utility, will intensify this week when the industry regulator appoints LEK Consulting as an independent monitor of the company.
Scrutiny of Thames Water, the crisis-hit utility, will intensify this week when the industry regulator appoints LEK Consulting as an independent monitor of the company.
Sky News has learnt that Ofwat is expected to announce LEK’s appointment within days.
The move was triggered in August when Thames Water lost two investment grade credit ratings, which compromised one of the conditions it must fulfil in order to maintain its operating licence.
The ratings downgrades were triggered by growing expectations that the company will need to be nationalised in the coming months amid a battle to raise new capital from private investors.
Last week, Sky News revealed that lenders holding £12bn of Thames Water’s debt had held face-to-face talks with Ofwat to pitch a rescue deal that they believe would avert its nationalisation.
The syndicate is racing to find a solution that would allow a restructuring that would incorporate a massive debt-for-equity swap and see fresh equity injected into the crisis-hit utility, which serves about 15m customers in London and the south-east.
A deal needs to be agreed by the middle of November because Ofwat is due to sign off its final regulatory determination for the company’s business plan at a board meeting in the second half of the month.
Creditors argue that Ofwat needs to demonstrate flexibility in its consideration of Thames Water’s business plan in order to make the company investible.
Further details of the creditor group’s proposals are unclear, although flexibility in relation to customer bill increases will inevitably be a component.
Thames Water is also facing a litany of regulatory fines over its poor customer service performance and dire record on sewage and water leaks.
Plans for an emergency liquidity facility of more than £1bn are also…
