The water supplier's lenders are trying to prevent the company from being taken over by the Burnham government

Thames Water's main lenders are offering the government a "golden share" and more control for local authorities in a bid to stop the troubled supplier from being nationalised. The government recently rejected a previous rescue proposal, and the BBC understands the lenders are preparing a legal challenge in case the new Andy Burnham-led government takes the firm into public hands. The "golden share" would give the government veto powers over major decisions such as mergers. The lenders are also proposing giving local authorities greater involvement in the firm, similar to the relationship between United Utilities and Greater Manchester agreed when Burnham was the city's mayor. In his first speech as prime minister on Monday, Burnham said he wanted to see greater public control of "life's essentials". Sources close to the creditors have told the BBC that in the event of full nationalisation they would pursue payment in full of the outstanding debts, as has happened in previous cases, which could leave the government with a multi-billion-pound bill. The London & Valley Water (L&VW ) consortium of lenders had already proposed a £10bn deal to prevent Thames Water from entering administration. It would involve writing off nearly half of its debt and injecting new cash in return for leniency on future pollution fines. The deal was rejected by the government in June, with then-environment secretary Emma Reynolds saying it did not do enough for consumers or the environment.