Top three quit East Midlands

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The Independent Online
THE THREE top executives at East Midlands Electricity have quit the group following its pounds 1.9bn takeover by PowerGen, it emerged yesterday.

Bob Davies, East Midlands' chief executive, Andrew Halford, finance director, and Keith Stanyard, distribution director, have all left the company, although PowerGen insisted that each of them had been offered jobs to stay.

The three executives are understood to have been entitled to 18 months pay for loss of office. Mr Davies was on a salary of pounds 237,000.

News of the high-level departures came as PowerGen reported an 8 per cent rise in pre-tax profits for the half-year to pounds 166m and said it aimed to launch the sale of two of its coal-fired stations within the next few weeks.

PowerGen agreed to dispose of stations - understood to be Fiddlers Ferry in the North-west and Ferrybridge in Yorkshire - in return for approval to buy East Midlands.

The sale could raise up to pounds 1bn and has attracted interest from a dozen potential bidders. But the sending out of the formal memorandum for sale to interested parties has been held up by delays in getting clearance on emissions limits for the stations from the Environment Agency.

PowerGen cannot advertise the stations until it knows by how much they will have to cut their sulphur emissions, something which has important implications for their operational efficiency.

In January the agency recommended that the UK's target of reducing sulphur emissions by 84 per cent be brought forward from 20015 to 2001. Since then the Department of Trade and Industry has published its energy review requiring large divestments of coal-fired stations by the generators. One PowerGen executive said there was a "lack of joined-up thinking" between the two departments.

PowerGen said it expected to sell the two stations with long-term coal contracts in place. But it refused to disclose how much extra coal it was negotiating to buy from RJB Mining, the country's biggest producer and denied that it was under pressure from the Government to reach a deal.

Ed Wallis, executive chairman, said US expansion remained a priority for PowerGen. But he said that following the collapse of its planned "merger of equals" with Houston Industries, PowerGen would now look at straightforward acquisitions.

The cold summer and a pounds 29m contribution from East Midlands helped lift operating profits for the six months to the end of September from pounds 187m to pounds 228m in the six months. But the East Midlands acquisition also helped raise net debt to pounds 2.5bn, leaving PowerGen with gearing of 155 per cent.

The group is changing its year-end to December in line with East Midlands' reporting period and will announce nine month results next March.

Outlook, page 23