£2.4bn nuclear sale starts

French firm may bid for stake in British Energy
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The Independent Online

The Government will launch the £2.4bn sale of part of its majority stake in British Energy this week in a move that could see foreign companies, such as French nuclear group EDF, buying minority stakes in the rejuvenated nuclear generator.

Government officials will hold a beauty parade of investment banks to handle the sale, which is expected to take place in the autumn. The National Audit Office criticised the Department of Trade and Industry earlier this year, for not using a competitive process to appoint advisers for the company's restructuring four years ago.

Credit Suisse, which advised the company then, is likely to bid to handle the placement of the Government's stake on the stock market. Citigroup and Rothschild, which already advise British Energy, could also be involved.

Ministers will issue a written statement this week, before Parliament's summer recess starts on 25 July, outlining plans to sell some of the Government's stake in the company.

Whitehall sources said the sale was "imminent". In this year's budget, the Chancellor signalled his intention to sell part of British Energy after the publication of the energy review.

The review, published last week, has paved the way for the construction of a new generation of nuclear reactors.

British Energy was rescued in 2002 by a Government-backed restructuring. Under the terms of this deal, it has a claim to 65 per cent of the company's cashflow, which will be converted into the same proportion of shares, now worth £7.2bn. Of this, the Government is expected to sell a third.

EDF, which sees itself as a nuclear "investor in waiting", is thought to be interested. Under the terms of British Energy's restructuring, no single investor can hold more than 15 per cent of its shares without Government approval. After the partial sale, the Government will retain most of the 30 per cent of the company's voting rights that it has now.

A British Energy spokesman said: "The Chancellor announced at the Budget that he would dispose of some of its stake in British Energy after the energy review. We view this as a positive move as it shows confidence in British Energy's financial position."

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