Energy priced at 205p
Sunday 14 July 1996
The price is expected to be finalised at around 205p, following the close of the offer to institutions late on Friday afternoon.
Advisers were still debating a range of 200p-210p late yesterday, but were erring on the side of caution in the face of weak markets and a desire to see a premium in trading on Monday.
"Wall Street and London were both jittery on Friday. The Government wants it to get off to a successful start tomorrow," one source close to the flotation said.
The climax to the ultimate privatisation comes as the Stock Exchange is understood to have called off a possible investigation into last week's closures of two of British Energy's eight reactors.
The shut-downs, at Hunterston B in Ayrshire and Hinkley Point B in Somerset, followed the discovery of weld cracks on Tuesday.
They were only announced late on Wednesday, however, after the offer to UK private investors had closed, prompting Labour accusations of "organised deceit".
The uproar recalled last year's controversy over the second stage sale of generator shares, when the Government was rebuked by City regulators over an electricity price review which sent shares plunging afterwards.
The exchange is now understood to have accepted assurances from BZW, the Government's brokers, and lawyers that the cracks were found during routine maintenance, however, and no announcement was needed before the private offer closed.
This weekend Labour still condemned the sell-off as a raw deal for taxpayers. Even after British Energy takes on pounds 700m of debt, the privatisation will raise pounds 700m less than the pounds 2.8bn cost of Sizewell B, the firm's new pressurised water reactor in Suffolk.
"The taxpayer has been massively short-changed. The taxpayer has already paid up front for the building of the industry and its liabilities and will now miss out on the cash it will generate," said John Battle, Labour's front-bench energy spokesman.
At the prospectus launch in late June, the Government indicated a range of prices from 180p-280p, which would have valued the nuclear generator at up to pounds 2bn.
The City, however, has fought a successful campaign to massage the price down over fears about electricity prices and future decommissioning and waste liabilities.
The likely pricing means 350,000 members of the public will pay 100p in a second instalment after a first payment of 100p. That is a 5p discount to the offer to institutions, whose 50 per cent take of the 700 million shares on offer was oversubscribed by around two times. Applications for 300 to 400 shares are likely to be satisfied in full, with some scaling back at 500 shares and beyond.
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