The battle for control of Thames Water’s future has intensified after a second group of bondholders lodged a fully subscribed bid to provide £3bn of new debt.

Sky News has learned that the utility’s Class B bondholders submitted a proposal to the company on Thursday morning to beat a competing offer from its Class A creditors.

The submission of the Class B group’s legally binding deal sparks a fight between some of the world’s biggest pension funds, hedge funds and insurers for a key role in determining the fate of Britain’s biggest water company.

Thames Water, which has around 16 million customers, is struggling to avoid the threat of insolvency and temporary nationalization as it seeks a compromise with Ofwat, the sector regulator, over its plans spending for the next five years.

The company’s shareholders have already abandoned plans to pump billions of pounds into it, calling it uninvestable.

The tabling of the latest proposal will put pressure on Thames to reconsider its public support for a more expensive deal with the Class A group, which includes companies like Silverpoint and Elliott Advisors, the US hedge funds.

One of the Class B group said its plan provided Thames Water “with a feasible and binding offer to meet the company’s immediate funding needs”.

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Amid a dispute with Class A creditors over the relative cost of their proposals for Thames Water, the source said Class B funding would provide “double the capital at a much lower cost and on more flexible terms “.

They added that it was open to all Class A and Class B holders.

It was not clear whether Thames Water would be able to commit to the Class B proposal under the terms of the agreement the company has already signed with the Class A group.

The Class B plan was assembled and financed in less than a fortnight by DC Advisory, investment bank and law firms Quinn Emmanuel Urquhart & Sullivan and Sidley Austin.

Class B creditors have calculated that Thames Water could save around hundreds of millions of pounds in interest and fee payments over a 12-month period if the company changed its support for their proposal.

Alastair Cochran, Thames Water’s chief financial officer, said last month that the Class B group’s proposals, which include finance lent at an interest rate of 8%, were not detailed enough to garner council support of administration.

A separate fundraising process is currently being carried out by Rothschild’s bankers, with Sky News revealing last weekend that KKR, the US private equity giant, was the latest party to express interest in a deal.

Any substantial pay rises for Thames Water executives – particularly those on the brink of collapse – arising from this deal would be highly controversial, with the government recently setting up an independent review of the sector which will examine labor reforms. large scale.

A significant incentive plan would also be controversial given that Thames Water will require forbearance from Ofwat, the industry regulator, in terms of substantial fines and other penalties it will likely have to pay due to its disastrous record in terms of leaks and wastewater waste.

A spokesperson for the Class B group, which includes BlackRock, the world’s largest asset manager, among its members, declined to comment.