Goldman helps electrify British Energy price

Shares in British Energy surged another 30 per cent yesterday after Goldman Sachs emerged with a 4.5 per cent stake in the beleaguered nuclear generator amid heavy trading.

Almost a quarter of the company is thought to have changed hands in the past couple of days as investors scrambled to buy shares after suggestions that a US hedge fund might be trying to negotiate an improvement in the financial restructuring terms agreed with the Government last year.

Apaloosa Investment Management disclosed last Friday it had acquired a 4.56 per cent stake in British Energy. Since then the share price has doubled. It closed 2.34p higher last night at 10.25p, valuing the company at £63.5m.

Goldman is holding its shares on behalf of nominee companies.

British Energy said it knew of no reason for the movement in its shares and privately there is scepticism about whether the sharp rise in price is anything more than a ramp.

Under the debt-for-equity deal struck last year, shareholders will be left with just 2.5 per cent of the company, while its banks and bondholders emerge with 97.5 per cent. The Government, in turn, has agreed to shoulder £4bn of liabilities in return for 65 per cent of all future free cash flow.