By Anousha Sakoui
LONDON (Reuters) -A group of Thames Water creditors have proposed an alternative liquidity package of up to 3 billion pounds ($3.89 billion) to give the British utility more time to seek a restructuring of its debt, according to sources with knowledge of the matter.
The group, comprising investors with hundreds of millions of pounds worth of so-called B notes, hope their plan will compete with one proposed by a more senior ranking group of A bondholders, two sources said, speaking on condition of anonymity because the matter is private.
The group, whose members include large institutional investors and banks, is offering the company a new debt facility of 1.5 billion pounds to 3 billion pounds, at an interest rate of 8%, according to the sources.
It is unclear if the company will consider the proposal or how the group will put it together.
Britain’s largest water company has been in crunch talks with creditors about securing funds to keep it going for a few months while it seeks billions of pounds it needs to survive.
The aim of the alternative plan is to give Thames Water liquidity and a stable platform as it seeks to raise longer-term capital from investors, according to one of the sources. The group hopes that in comparison its liquidity package imposes fewer conditions on the company, a second person said.
Thames Water said in September it could run out of money in three months if most of its lenders do not approve further borrowing to tide it over. The British government is closely monitoring the water supplier and is ready to take action if needed, environment minister Steve Reed said on Wednesday.
Thames Water has billions of pounds worth of securitised debt divided into more senior ranking A bonds and more junior B bonds.
The company has been in talks with holders of 12 billion pounds worth of A bonds over a potential 1 billion-pound lifeline to give it time to restructure 16 billion pounds of debt and avoid the threat of administration, sources previously told Reuters.
Talks with this group are advanced, a third person familiar with the matter said.
Britain’s water regulator, Ofwat, has already imposed a “Turnaround Oversight Regime” on Thames Water and appointed an independent monitor to report on its turnaround.
($1 = 0.7715 pounds)
(Reporting by Anousha Sakoui; Additional reporting by Paul Sandle and Andres Gonzalez; Editing by Susan Fenton)
