Polygon calls in the lawyers to halt British Energy restructuring

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The Independent Online

Polygon, which is leading a shareholder revolt against the restructuring of British Energy, will threaten further legal action against the nuclear generator this week.

Polygon, which is leading a shareholder revolt against the restructuring of British Energy, will threaten further legal action against the nuclear generator this week.

The hedge fund, which has built up a 5.6 per cent stake in the company, could take it to court if its management denies shareholders a better deal.

Under the proposed restructuring, British Energy shareholders could be left with 2.5 per cent of the equity. The rest would go to bondholders and other creditors.

Polygon wants to meetthe management of British Energy. It will seek further shareholder support at the company's annual general meeting this week. A source close to the fund said: "There are clearly legal elements to our strategy. It would be stupid not to try to strengthen our hand at the AGM. But we want to work with management if we can."

British Energy will ask shareholders to approve the restructuring package, probably in the autumn. Polygon announced last week that it would try to block the restructuring by use of a planned change in listing laws. The UK Listing Authority seeks to require companies to get shareholder approval before they delist later this year.

This could be crucial, as British Energy has said that, even if shareholders do not vote for the restructuring, it would delist from the stock exchange and restructure anyway. Polygon is threatening to block its attempts to delist when the new rule is in place.

Lawyers said that even if their attempt to stop British Energy delisting fails, the rebel shareholders could still block the restructuring in the courts. They could argue that the company's directors have not fulfilled their fiduciary duties to shareholders.

Bob Bishop, a partner at law firm DLA, said: "If British Energy delists, this would not be sanctioned by the court under the Companies Act. This leaves British Energy more exposed to legal action and ratchets up the chances of someone like Polygon bringing a claim."

British Energy says the alternative to the proposed restructuring is administration.

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