FSA scrutinises collapse of Independent Energy

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The Independent Online

The city's main watchdog, the Financial Services Authority, is understood to be examining the collapse of Independent Energy, the electricity and gas supplier which called in the receivers last week after being overwhelmed by billing problems.

The city's main watchdog, the Financial Services Authority, is understood to be examining the collapse of Independent Energy, the electricity and gas supplier which called in the receivers last week after being overwhelmed by billing problems.

The FSA's examination is thought to be focusing on a £100m share offer by Independent Energy last March and statements the company made about its progress in resolving the billing difficulties, whichcame to light in February.

Independent Energy was reporting sharp increases in profitability and reassuring investors that problems were under control at the same time as the backlog of bills waiting to go out was increasing.

When the company's bankers called in receivers last Friday, Independent Energy had bank debts of at least £165m and, according to the latest information, a billing backlog of £119m.

The March share issue was arranged by the US investment bank Donaldson Lufkin Jenrette and enabled Independent Energy to raise £99m from US investors. Three of the company's directors, including its founder John Sulley and its chairman, Burt Keenan, took part in the offer, selling shares worth a total of £19m.

The prospectus made reference to the billing problems, which were affecting Independent Energy's ability to send out bills to small businesses and domestic customers. But it added: "We have modified the software provided by a third party vendor in a manner that we believe now enables us to identify and correct faulty data."

DLJ could face legal action from investors if it was felt that the information provided was incomplete. The FSA monitors price-sensitive information issued by companies as a matter of routine.

Meanwhile, Myles Halley, one of the joint receivers, said he was confident of selling Independent Energy as a going concern. "We are in serious negotiations with interested parties but we have to find a buyer within days, not months," Mr Halley said.

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