Postel wants electricity stake limit removed

Postel, one of the leading pension fund companies, has written to the 12 regional electricity companies, asking them to remove the restriction that prevents any single investor holding 15 per cent or more of the stock. Postel said the limit could act against the interests of shareholders as a whole.

In a letter to all 12 chairmen, David Adie, Postel's shareholder affairs executive, said: "I see no reason for a further five-year restriction on share ownership in the RECs and believe this restriction to be unwelcome and a distortion of the market."

He said that while both electricity and water companies were given the protection of Government's "golden share" and the 15 per cent limit, the limit for the water companies expired after five years.

Mr Adie confirmed that Postel is one of the shareholders in Northern Electric to have asked for an extraordinary general meeting to remove the limit following the £1.2bn hostile bid by Trafalgar House. He said: "In the case of Northern it does not mean that we have determined to support the Trafalgar bid, a decision which will be made when all the arguments have been analysed.

The Northern EGM is scheduled for next Wednesday, two days before the company's final defence is expected. The company renewed its attack on Trafalgar House yesterday, reiterating its view that the group was "financially challenged" and calling on any shareholders who had accepted the offer to withdraw. Almost 5 per cent of shareholders are so far known to have accepted.

Northern said: "Trafalgar House needs Northern Electric's sound businesses and strong balance sheet and cash flow to add stability to its own mix of investments, which have an uncertain future and prospects. It is difficult to see how Trafalgar House's new management will add value to Northern Electric."

Trafalgar rejected the criticism as the "usual rude remarks". It said the £10.48 per share cash offer remained above Northern's share price. Northern's shares rose 19p to close at 978p.

Separately it emerged that George Soros, the international investor, has sold his 1.33 per cent stake in Northern. The stake was bought over a period by Quantum Partners, a fund managed by Soros Fund Management.