Shareholders to get pounds 600m as National Power splits in two

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NATIONAL POWER, once Britain's biggest electricity generator, yesterday unveiled a sweeping reorganisation, which will see the company split into two, shrunk in size and the dividend halved.

The restructuring will involve a demerger into a UKcompany "npower" and an overseas electricity generator called International Power. National Power will also return pounds 600m to shareholders. The payout, in the form of a share buyback, will be funded by the sale of two more power stations for pounds 1.05bn. The sale will reduce National Power's share of the generating market in England and Wales to 8 per cent, compared with 46 per cent at privatisation nine years ago.

Sir John Collins, who will remain as executive chairman until next year to oversee the demerger, denied the break-up was an admission of failure, insisting it was the best way forward. The overhaul is the result of a six-month review which also looked at the options for merging with other companies. However, Sir John maintained that the board had not attempted to sell the company.

The demerger, expected to take place by next July, will result in shareholders receiving one share in each of the two new London-listed companies in place of each existing share.

International Power will have interests in 22,000 megawatts of generating capacity in countries including Australia, the US, Pakistan and Spain. The UK arm, npower, will have about 10,000 megawatts of capacity, 2.5 million domesticcustomers. It will also assume the larger part of the pounds 1.1bn debt left after the restructuring.

NatPower is proposing a dividend for the year of 15p, against 28.6p last year.

Outlook, page 21

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