(Bloomberg) -- Thames Water Utilities Ltd. agreed to take immediate remedial steps to restore investment-grade ratings required for the company to keep its license, the UK’s water regulator said.
The company — Britain’s biggest water and sewage-services provider — will further develop a revised business plan covering to enable its turnaround and increase investment, regulator Ofwat said in an emailed statement Friday.
Thames also agreed to the appointment of an independent monitor who will report to Ofwat and make recommendations. The utility will continue with its plans to raise equity and will make key board appointments for additional oversight.
The decision follows a public consultation after the measures were announced earlier this month. Cash-strapped Thames has been dealing with turmoil for more than a year after soaring interest rates piled pressure on its finances.
The remedial measures will remain in place until the company, which serves areas including London, regains two investment grade credit ratings. It was cut to junk last month — a downgrade that breaches its operating license. All water companies are required to maintain an investment-grade credit score from two ratings firms.
“We note that Ofwat has accepted the undertakings we have proposed,” Thames said in an emailed statement. The company is focused on working with Ofwat on its 5-year business plan, “which is key to attracting equity into the business,” it said.
The revised business plan, covering the period through March 2030, is due Aug. 28, when water companies have to update the regulator. The sector has faced public anger over illegal spills and leaks caused by decades of under-investment.
Thames needs to raise at least £2.5 billion ($3.3 billion) in new equity by May 2025 to avoid going broke.
In July, Ofwat branded Thames’ business plan as “inadequate.” The watchdog criticized the company for lacking ambition on cutting pollution from storm overflows in the sewage network, sewage spills into people’s homes and stemming chronic leaks. Thames has agreed to improve its plans for addressing them.
--With assistance from Jessica Shankleman.
(Updates with Thames statement in sixth paragraph. A previous version of this story corrected the period for the revised business plan.)
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