NEWS :Northern feels heat Trafalgar House nearer to abolishing electricity company's ownership limit

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Trafalgar House has collected enough support from Northern Electric shareholders to force the company, for which it is bidding, to call an extraordinary meeting to change its Articles of Association. The change would abolish the rule that prevents any individual shareholder from owning more than 15 per cent of Northern.

In a letter this weekend to David Morris, the head of Northern, Trafalgar's chairman, Simon Keswick, claims that more than 10 per cent of shareholders are backing his demand for an egm.

Abolition of the 15 per cent rule would open the way for Trafalgar to press ahead with its bid for Northern. The electricity company refused to call an egm when Trafs requested one before Christmas.

Once the meeting has been called, the article can only be abolished with the agreement of at least 75 per cent of those voting. The shareholders are not expected to block the move, however, since to do so would prevent the bid.

Trafalgar, which may publish its offer document next week, holds no shares in Northern. However, Swiss Bank, Trafalgar's adviser, emerged last week as a 3.5 per cent stake stakeholder.

The rule change would create a precedent for other regional electricity companies, all of which have identical Articles of Association. If Trafalgar's takeover is successful, a wave of bids and mergers is expected.

Friday's revelation that Swiss Bank also holds 8.2 per cent of Yorkshire Electricity prompted speculation that a bid was on the way for that company as well. However, some analysts believe that SBC is building up a portfolio of electricity company sharesin anticipation of further bids throughout the industry.

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