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Ofwat today published its review into the financial position of Northumbrian Water. This follows Ofwat's position paper, issued last August, after the company suffered a down-grading of its credit quality immediately after its acquisition by Northumbrian Water Group plc in May last year. The review concludes that, since that time, the water company has taken adequate steps to demonstrate both to the capital markets and to Ofwat that it is able to raise finance to fund future investment programmes. Northumbrian's credit rating has improved due to a number of steps taken by the company including its success in obtaining a 10% real increase in its price limit for 2004-05 which has improved its cash flow. Ofwat remains concerned over the links between the debt guaranteed by Northumbrian Water and other debt raised by its parent company. This potentially exposes customers to risks arising outside of the regulated business. The company believes that the risks are remote but Ofwat will continue to monitor the position. If Ofwat believes that the risks have changed, we will expect the company to remedy the position as a matter of priority. In any event, the link will be eliminated in 2006 when the parent company bond matures. Northumbrian Water has confirmed that, in accordance with its licence, any new financial arrangements will not result in any link between debt guaranteed by the regulated company and any debt raised for purposes other than the financing of the appointed business. Notes to Editors: 1. The Director General of Water Services is the economic regulator of the water and sewerage companies in England and Wales. He exercises his powers in a way that he judges will allow them to carry out their functions properly, and finance them. WaterVoice represents customers' interests. 2. Ofwat's review paper, Ofwat review of the financial position of Northumbrian Water Ltd, will be available from the Ofwat website on www.ofwat.gov.uk or from the Ofwat library on 0121 625 1373. 3. Ofwat published its position paper, The completed acquisition of Northumbrian Water Ltd: A position paper by Ofwat, on the 19 August 2003. This is available from the Ofwat website on www.ofwat.gov.uk or from the Ofwat library on 0121 625 1373. 4. Northumbrian Water supplies water and sewerage services to more than one million customers in the north east of England, and water services to a further 730,000 customers in Essex and Suffolk. 5. Following its acquisition by the Northumbrian Water Group (formerly Aquavit plc) last year, Ofwat modified the water company's licence to ensure that its credit rating did not fall below investment grade. MEDIA ENQUIRIES TO OFWAT PRESS OFFICE ON: 0121 625 1416/1496/1442 Out of hours enquiries to pager: 08700 555 500 water 503/509. Ofwat publications and press notices can be found on Ofwat's website at: www.ofwat.gov.uk  | ||||||
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