British Energy worth up to £1.8bn when shares re-list

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The Independent Online

British Energy shares are set to be re-listed on Monday in a move likely to value the nuclear power generator at up to £1.8bn - some 56 times more than it was worth when trading was suspended last autumn.

British Energy shares are set to be re-listed on Monday in a move likely to value the nuclear power generator at up to £1.8bn - some 56 times more than it was worth when trading was suspended last autumn.

Provided the High Court in Edinburgh approves a financial restructuring today giving creditors control of the company, trading in British Energy shares will resume next week. However, it is likely to be extremely volatile.

According to an analysis by the investment bank UBS, the shares could trade at anywhere between 101p and 307p, giving the company a stock market valuation ranging from £600m to £1.8bn and a value at the mid point of £1.2bn.

In the grey market, the shares are already trading at between 315p and 320p, making them more valuable than Scottish Power and Scottish & Southern Energy. When the shares were delisted last October, they were trading at 14.6p, giving the company a market capitalisation of just £32m.

Existing shareholders will be all but wiped out under the financial restructuring, receiving just 2.5 per cent of the new equity and warrants giving them a right to subscribe for a further 5 per cent of the company. For every 50 shares currently held they will receive one new share and 2.1 warrants, exercisable in 2007 at a price of 98p.

British Energy ran into crisis in 2002 after the price of wholesale power plunged, making its nuclear stations uneconomic. It survived only with emergency credit lines from the Government. Prices have since recovered, making the company viable once more, but at the time the debt-for-equity swap was agreed they were still depressed.

A group of rebel shareholders failed in an attempt last year to force a renegotiation of the terms of the restructuring to give equity investors a much bigger share of the cake.

In addition to its market capitalisation, British Energy will have debts of £700m, giving it a total enterprise value of about £2bn. The cost of the restructuring was £104m, shared among fees earned by law firms, accountants and financial advisers.

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