British Energy returned to the stock market yesterday with a valuation of £1.46bn after a financial restructuring which saw creditors seize control of the nuclear power generator.
The company had a market capitalisation of just £32m when its shares were delisted last October ahead of the massive debt-for-equity swap, which gives bondholders 97.5 per cent of the company.
Shares in British Energy opened yesterday at 286p as trading resumed but then dipped to 270p by lunchtime. They ended the day at 263p. Brokers urged investors to take a cautious approach to the shares with trading likely to be extremely volatile for the first few days.
Together with £700m of new debt, the re-listed company has an enterprise value of about £2.2bn.
The 286p opening price was towards the top end of the forecast trading range of 101p to 307p. Cazenove said that British Energy's fair value price was no more than 200p, arguing that falling wholesale electricity prices and reliability problems at some of the company's nuclear stations would hold back profitability. Credit Suisse First Boston put a target price of 262p on the shares.
The company has recently been forced to shut down reactors at its Hartlepool and Heysham 1 stations because of unexpected difficulties. British Energy is also vulnerable to price movements because it operates as a baseload generator.
Brokers at Cazenove said: "We see substantial downward pressure on the wholesale electricity price due to falling gas prices and we are yet to be convinced that BE's UK nuclear fleet can be run at high load factors."
British Energy ran into crisis in 2002 after the price of wholesale power plunged, making its nuclear stations uneconomic. It only survived with emergency credit lines from the Government and the transfer of £4.2bn in liabilities to a new state-run agency.Reuse content