Thames Water's lower-ranked creditors oppose restructuring plan, float their own

(Reuters) -Thames Water's lower-ranked creditors on Tuesday filed an objection to the struggling utility company's proposed restructuring plan and sent a letter outlining an alternative.

Thames, burdened with 17 billion pounds ($21.33 billion) of debt, has been struggling to get an equity raise approved to extend its liquidity runway and dodge a renationalization.

"The Alternative Restructuring Proposal provides Thames Water with significantly more committed funding on much cheaper and more flexible terms as compared to the Class A restructuring plan," said the Class B creditor group.

Class A creditors are so-called senior creditors, who will be paid back before others, including the Class B, or lower-ranked, creditors.

Class B creditors have issued a so-called Practice Statement Letter, their "first formal step" in relation to their alternative restructuring plan.

Their plan includes a proposal of 3 billion pounds in committed funding bearing an interest rate of 8%, in contrast to the 9.75% rate in the restructuring plan endorsed by the company and 75% of the senior creditor class.

The filing precedes a court hearing of the two restructuring proposals set for Feb. 3-6.

The restructuring plan proposed by the Class B creditors will also be independently evaluated at a different hearing on Jan. 20.

Thames Water did not immediately respond to a request for comment on the new plan.

($1 = 0.7971 pounds)

(Reporting by Yamini Kalia in Bengaluru and Anousha Sakoui in London; Additional reporting by Radhika Anilkumar; Editing by Mrigank Dhaniwala)