Outlook: Put this plan back in its Box

Let an accountant out of his Box and half-baked capital reconstructions of the type unveiled yesterday by the National Grid are the inevitable result. Stephen Box has been finance director at the Grid for four short months, his predecessor having been asked to leave after a fit of conscience (he embarrassed the rest of the board by giving his share option profits to charity). But already he is making his mark. Mr Box, whose previous job was senior partner at the Grid's auditors, Coopers & Lybrand, has conjured up a bizarre scheme to give money to shareholders with one hand and then take it back with the other.

The scheme works like this. The Grid hands out pounds 770m to shareholders by way of a special dividend. So far, so uncontroversial. Like lots of other stodgy old utilities, the management has run out of ideas and reckons shareholders can find better uses for the money themselves. Since the dividend payment is accompanied by a share consolidation, the exempt funds miss out on their tax credit, but you can't have everything. Now comes the tricky bit. Shareholders are then asked to reinvest pounds 300m to pounds 500m of the proceeds in a convertible bond issue just in case an electrifying overseas opportunity comes along.

The idea is to provide "financial flexibility" but since the Grid doubts whether any major acquisitions are in prospect for the next two years this seems a largely redundant flexing of muscle. Even if an opportunity were to present itself, the omens are not good. The Grid got burnt in Pakistan and missed out in Australia, which only leaves it with a slice of the action in Argentina while the regulator takes a hatchet to its margins back home.

Shareholders will have to wait until January before they see the terms of the bond issue. In the meantime they might wonder why the company is presenting the market with an opportunity to deal against it until the issue is safely away.

The only shareholder to benefit very obviously is HSBC Investment Banking, which holds 11 per cent of the Grid and is pocketing pounds 10m for helping Mr Box devise this little wheeze. The last time HSBC's relationship with the Grid came under the spotlight was when its broking arm, James Capel, acquired the Grid stake on behalf of the Olyan group in Saudi Arabia. The point of that little deal was never satisfactorily explained. Unless shareholders get some good answers from the Grid as to why they should support this latest humdinger, the Box plan should be put firmly back where it belongs.

Arts and Entertainment
musicBand's first new record for 20 years has some tough acts to follow
peopleAt least it's for a worthwhile cause
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments