British Energy on brink again as investors 'play dangerous game'

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The Independent Online

British Energy has warned that it faces liquidation in four weeks because of rebel shareholders' plans to block the nuclear generator's restructuring.

British Energy has warned that it faces liquidation in four weeks because of rebel shareholders' plans to block the nuclear generator's restructuring.

The warning is the latest dramatic twist in the company's fight for survival two years after the Government rescued it from bankruptcy.

The company, which provides a fifth of the UK's power, has £1.5bn of debt in bonds and bank loans. This will become immediately repayable if British Energy's proposed restructuring is blocked, ending a standstill agreement on debt repayments to its creditors in place for the past two years.

British Energy will hold a shareholder meeting next month to seek approval for the £5bn Government-backed restructuring, which will leave investors with just 2.5 per cent of the equity. The rest will go to creditors.

US hedge fund Polygon and investment fund Brandes are leading the revolt to negotiate a better deal and will vote against the plan.

British Energy's "plan B" if it does not get approval for the restructuring is to delist from the London Stock Exchange and implement it anyway.

But delisting might no longer be an option, it emerged this weekend. On Friday, British Energy will announce the date of a separate vote demanded by Polygon and Brandes.

Shareholders will vote on a resolution to prevent British Energy delisting without their approval. If this is passed - and the rebels appear to have at least 25 per cent of investors backing them - the company cannot delist.

Without shareholder approval for the restructuring, and if it is unable to delist, the restructuring plan will lapse and British Energy will become liable for its debts again.

"These shareholders are playing a dangerous game," a source close to the company said. British Energy would face voluntary or involuntary liquidation, and shareholders would not receive anything.

The rebel shareholder plans mean that European Commission approval for the restructuring, expected this week, could now be irrelevant.

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