Thames Water wins majority support among key Class B creditors for recapitalisation

Oct 16 (Reuters) - Thames Water said on Friday it had reached an agreement with key Class B creditors on a proposed recapitalisation, securing support from holders of more than 60% of its junior Class B debt and advancing efforts to restructure Britain's biggest water utility.

The proposal would see about £1 billion ($1.33 billion) of Class B debt written off, with those creditors receiving a roughly 5.9% recovery through equity and other rights in the restructured company in return. 

The deal marks progress for Thames Water's senior creditors, known as London & Valley Water consortium, who are pursuing a rescue plan involving debt writedowns and fresh equity investment to avert temporary government control of the utility.

L&VW declined to comment. 

The utility, weighed down by about £20 billion in debt, is seeking to overhaul its debt-laden balance sheet through a broader recapitalisation as it works to improve its finances and services amid mounting fines for polluting rivers with sewage.

On Thursday, Thames Water said it needed to increase its emergency funding facility by £2.4 billion to £5.4 billion to avoid running out of cash before its planned recapitalisation is completed.

Thames Water said talks with L&VW and regulators on the proposed recapitalisation were ongoing, with no decision yet taken on whether to proceed with the consortium's rescue plan.

The future of Thames Water is being closely watched after Prime Minister Andy Burnham last month pledged legislation allowing public ownership of water companies while the government and regulators consider the L&VW rescue plan for the utility.

($1 = 0.7511 pounds)

(Reporting by Ankita Bora and Rishab Shaju in Bengaluru, additional reporting by Akshaya V.; Editing by Shreya Biswas)