Investors stall £1bn takeover of power firm

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The Independent Online

Bondholders are demanding access to Midlands Electricity's books before deciding whether to back a £1.1bn takeover by rival power group Scottish and Southern.

They are angry they have been asked to accept a 14 per cent cut in their investment as part of the deal, announced last month. Scottish and Southern is offering 86p in the pound to buy £567m of bonds and aims to take on £502m of other debt. It will also pay the US owners of the business, Aquila and First Energy, £43m in cash. Scottish and Southern has so far been unwilling to up its offer and chief executive Ian Marchant has warned that Midlands Electricity, which supplies 2.4 million customers, faces administration if the deal does not go through. But a committee of bondholders who own over half the bonds want to carry out their own due diligence to see if there is another option.

The group, advised by Close Brothers and law firm Cadwalader Wickersham & Taft, has already threatened to derail the bid. However, if allowed to see the books, it is understood they could accept the original offer if no alternative is found.

A Scottish and Southern spokesman welcomed the move, saying it was "good news" and meant discussions would be able to go forward. The acquisition, should it go through, will almost double Scottish and Southern's debt to £2.3bn.