Unions representing miner Samarco employees file competing restructuring plan -source

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SAO PAULO, May 19 (Reuters) - Two unions representing employees of miner Samarco Mineracao SA have filed a restructuring plan for the company, according to a source with knowledge of the matter.

The plan is supported by current shareholders in Samarco - Vale SA (VALE3.SA) and BHP Group (BHP.AX)- and is similar to the previous plan proposed by Samarco and rejected by bondholders.

Vale confirmed in a statement that it and BHP Brasil support such a plan.

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The union group's plan includes a two-year job stability clause for Samarco employees. The debt-for-equity swap is similar to what Samarco had offered previously to financial creditors. Samarco and BHP will continue to be controlling shareholders.

The source, which asked for anonymity to disclose private talks, said employees were afraid of control changes at Samarco and potential layoffs.

Financial creditors presented their proposal on Wednesday, proposing a debt-for-equity swap that would change Samarco control.

"BHP Brasil and Vale are analyzing the alternative plan proposed by financial creditors, which is focused only on profits rather than on efforts to repair the Fundao dam failure," Vale said.

The Fundao tailings dam in the city of Mariana collapsed in November 2015, killing 19 people and obliterating villages in what as ranked as Brazil's worst environmental disaster.

The employees' proposal also adds the payment of "extraordinary dividends" to financial creditors of a share of additional cash flow generated if the miner can accelerate production ramp-up.

It's still unclear how the bankruptcy court will proceed after the filing of two different plans, one by the unions and another by bondholders, since Samarco's last restructuring plan was rejected by creditors. The union plan was filed under seal but will become public on Thursday.

The plan is supported by the employees and by 935 unsecured creditors with a total credit volume of around $5 million.

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Reporting by Tatiana Bautzer; Additional reporting by Roberto Samora; Editing by Tom Hogue and Mark Porter

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