Investors bid to block power firm rescue plan

Disgruntled shareholders in troubled nuclear generator British Energy today moved to try to block its life-saving restructuring package.

Two of British Energy’s institutional investors have demanded a special meeting to table changes to the firm’s rules which would prevent it delisting from the stock market without their permission.

They have also tabled a resolution that would prevent the board extending the time limit for agreeing the rescue package, which expires in late January but still needs European Commission approval.

British Energy has insisted that the deal, which will leave shareholders with just 2.5% of the company, is the best it can achieve.

It has warned that it may put itself into insolvency – leaving investors with nothing – if they fail to approve the rescue plan.

But the two investor groups, Polygon Investments and Brandes Investment Partners, want a larger stake for shareholders.

In one of the resolutions they propose to table at the meeting, they said they wanted the board to “use all reasonable efforts” to get a better deal.

British Energy today said in a statement that it was considering its response to the application for a meeting.

But it warned: “If, for any reason, the proposed restructuring cannot be implemented, the board may need to commence insolvency proceedings.

“If insolvency proceedings are commenced, distributions (if any) to unsecured creditors may represent only a small fraction of their unsecured claims and it is highly unlikely there would be any return for shareholders.”

The Government-backed restructuring was agreed last year, but has taken longer to complete because of the need for European Commission state aid clearance.

The plan, which was drawn up in October 2003, involved banks and bondholders agreeing to write off £1.3bn (€1.9bn) in debt in return for control of the group.

As part of the deal, British Energy pledged to improve reliability and its operational performance, as well as secure European Commission support as the proposals will see the British government meet some decommissioning liabilities.

The commission is considering a plan whereby the company’s nuclear, coal-fired power generation and energy sales arms would be separated into three subsidiaries.

It would allow the UK government to provide aid for the company’s nuclear decommissioning activities whilst ensuring it cannot be used to subsidise BE’s other operations.

In June, British Energy showed signs of some trading improvement as it reported pre-tax profits in the year to March 31 of £232m (€341.8m) – compared with losses of £4.3bn (€6.3bn) a year earlier.

The group’s biggest plant is at Hartlepool, with others at Heysham, Lancashire; Hinkley Point, Somerset; Hunterston, Ayrshire; Dungeness, Kent; Sizewell, Suffolk and Torness, East Lothian.