A group of noteholders of bankrupt regional theme park operator Six Flags Inc said on Sunday it submitted an alternative reorganization plan that transfers most of the equity to them.

The group said their plan, submitted to Six Flags' board of directors on November 25, was supported by noteholders owning more than $500 million of the approximately $870 million in notes issued by the company.

The new plan proposes that lenders and a senior class of noteholders be paid in full, either with cash or reinstatement of debt.

The noteholders who proposed the plan will receive up to 81 percent of the reorganized company's stock. That compares with the company's current plan that proposes giving them less than 5 percent of the stock.

The noteholders proposed using a rights offering of $420 million to pay senior lenders and a senior class of noteholders.

The proposal is the third alternative plan from investors in Six Flags, the world's largest operator of regional theme parks.

Six Flags filed for bankruptcy in the middle of the year with an original plan that transferred almost all of its stock to senior lenders, including JPMorgan Chase & Co , in return for cutting its debt.

The initial plan sparked immediate opposition, in part because it was far more favorable to bank lenders than what the company had proposed just prior to bankruptcy.

That prompted an alternative plan backed by hedge fund Avenue Capital Management, which owned the senior class of notes. Under the Avenue Capital proposal, which the company has since adopted as its current plan, senior lenders will be paid in full and most of the equity would go to the senior class of noteholders.

The plan by the junior class of noteholders, led by hedge fund Stark Investments, did not mention any recovery for equity holders.

Investors in Six Flags preferred shares, known as PIERS, have proposed a plan that will pay all creditors in full. That plan, backed by Resilient Capital Management LLC, proposed raising capital by issuing convertible securities.

Six Flags did not immediately return calls seeking comment.

The noteholders who proposed the plan did not return calls for comment.

The case is In re Premier International Holdings Inc. and Six Flags Inc., U.S. Bankruptcy Court, District of Delaware, No. 09-12019.

(Reporting by Tom Hals; additional reporting by Ritsuko Ando in New York, editing by Matthew Lewis)

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