Nuclear group to sell stake in US power company

Troubled nuclear power group British Energy today said it had agreed to sell its 50% stake in AmerGen Energy for £174m (€247.7m).

The group, which is battling to reach a rescue deal with banks and bondholders before the expiry of a British government-imposed deadline of September 30, said it would offload the interest to FPL Energy, a wholly owned subsidiary of US-listed FPL Group.

It said it would use the proceeds of the sale to repay cash made available to the company under the terms of a £650m (€925.6m) Department of Trade and Industry credit facility last September, which has been extended by £200m (€284.8m).

The deal is one of the conditions of the proposed restructuring of the company agreed with its creditors and the DTI in February.

AmerGen owns and operates nuclear power plants in the US.

British Energy said the deal is subject to approval by the DTI in the UK and US regulators.

On Sunday, the Government warned that British Energy continues to face a serious possibility of going into administration if it is unable to reach a rescue deal with its creditors.

The East Kilbride-based group, which produces around a fifth of the UK’s electricity needs, is in talks with banks and bondholders about a restructuring deal before the September 30 deadline.

The Department of Trade and Industry refused to substantiate Sunday newspaper reports that officials were drawing up detailed plans to renationalise the power generator if a deal could not be struck in the next three weeks.

But a DTI spokeswoman said ministers had always maintained that insolvency was a possibility.

British Energy has blamed its problems on the high fixed costs of nuclear generation and a steep decline in wholesale electricity prices.

In June, it announced losses of £4.3bn (€6.1bn) after slashing the value of its power plants and warned it could yet fall into insolvency.

The company has been forced to cut the book value of its eight UK nuclear plants by £3.6bn (€5.1bn) to around £800m (€1.1bn) and the Eggborough coal-fired station by £151m (€215m).