Thames Water - comment

Triggered by a small dividend to fund interest payments at Kemble, the stand-off between the utility and its regulator underwent another round yesterday as TW’s co-CEOs were forced to apologise over the insensitive structuring of the latest equity injection as a shareholder loan and the EFRA committee blasted Ofwat over its failure to contain TW's leverage situation in the first place. 

Ofwat rattled its sabre, advising it would be prudent to prepare for the special administration of TW, if the dividends that Kemble require cannot be portrayed as being in the best interest of the public and doesn’t meet the “obligations". Note that Kemble will need fresh cash by April to service oncoming maturities. The trouble of course with the sabre rattling is that shareholders will find it hard to commit to further investments on that basis until all sides have agreed on a plan and Modelling Consultations only begin in March / Final Determinations aren’t due before December 2024. The Tories need this resolved ahead of elections.