‘British Energy, creditors confident over debt deal’
REUTER - 26/09/03

By Sudip Kar-Gupta

Nuclear power company British Energy Plc, which nearly plunged into insolvency last year, said on Friday it was confident of agreeing restructuring proposals with its creditors before a key deadline next week.

“We’re confident we’ll get there by Tuesday,” a spokesman for Britain’s biggest power generator told Reuters.

Sources close to the creditors said they were also confident of a deal over restructuring British Energy’s 1.3 billion pounds of debt, which is crucial if the company is to avoid going into administration.

“We’re all working towards the Tuesday deadline, and not expecting to see our kids this weekend,” one of the sources said.

British Energy, which produces around 20 percent of the country’s electricity, was pushed to the verge of insolvency last year, by falling UK wholesale power prices, and had to be rescued by the British government with an emergency loan.

The financial aid was conditional upon the company agreeing with creditors on restructuring its debt by September 30.

The company’s fate also depends on the outcome of a European Commission probe into whether Britain’s aid package broke European Union laws.

A spokeswoman for the government’s Department of Trade & Industry (DTI) said administration was still an option, and added the government believed it had not broken EU rules.

“We’ve always made it clear that administration remains and option,” she told Reuters.

“We believe that we’ve complied with the criteria laid down by the EU, and we’re confident we’ll get their approval,” she added.

PAIN
British Energy chairman Adrian Montague told shareholders in July that restructuring would be painful for creditors and shareholders. Its shares, once part of the FTSE 100 index and now just a penny stock, closed down 1.85 percent to 5.30 pence.

British Energy bonds were trading around 80 percent of face value on Friday, signifying that bondholders expect to get back around 80 percent of the value of their original investment.

Some analysts believe that recent electricity price rises this year may herald a recovery in the sector.

But for many investors who lost millions through British Energy’s demise, the turnaround may be too late. Many retail investors bought British Energy shares when the former state-owned firm was privatised in 1996.

“Most of the people who owned shares in the company were ordinary people,” said Malcolm Stacey, director of private investors collective ShareCrazy.com

Stacey lost around £60,000 on British Energy.

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