British Energy carries out threat to delist its shares

Rebel shareholders in British Energy reacted furiously yesterday after the board carried out its threat to delist the shares in order to force through a £3.4bn rescue of the troubled nuclear generator.

Rebel shareholders in British Energy reacted furiously yesterday after the board carried out its threat to delist the shares in order to force through a £3.4bn rescue of the troubled nuclear generator.

Polygon Investments, the US hedge fund that is leading attempts to block the refinancing, claimed that despite the company's move it could still block the deal, which will see creditors take control of 97.5 per cent of the business.

However, a BE spokesman said it was confident that this would not be the case and would set out the reasons why when it issues the circular to shareholders today convening the extraordinary meeting demanded by Polygon.

BE's chairman, Adrian Montague, said the board had taken the decision to delist with "great reluctance" but concluded it was necessary to protect the company's interests. It is understood that in the past 48 hours a number of bondholders have hardened their stance, warning that they would demand immediate repayment of their debt if the restructuring agreement failed, pushing the company into insolvency.

Polygon said in a statement: "We are astounded at the total disregard that British Energy is showing to shareholders. We are pressing ahead with the EGM we have requested. This will give shareholders an opportunity to prevent BE from making disposals without shareholder consultation whether the company is listed or not."

The hedge fund has tabled a resolution which would give shareholders the power to block the disposal of assets without their approval. It needs 75 per cent support to win the vote.

But a BE spokesman maintained that once the shares were delisted, the board would be free to complete the creditor restructuring agreement, which involves a £1.3bn debt-for-equity swap with bondholders.

BE shareholders will still be asked to approve the restructuring at a second EGM but if they fail to give it their backing then they will be left with no stake in the company at all when its shares are re-listed, he added.

BE shares fell 16 per cent to 15.25p yesterday, valuing the company at £95m as the conviction grew that the rebel investors had failed to obtain a better deal for ordinary shareholders. BE, one of the last companies to be privatised by the Conservatives, still has about 230,000 small shareholders who between them own 20 per cent of the company.

Bondholders in BE welcomed the company's move. Andrew Wilkinson of Cadwalader Wickersham and Taft, the law firm representing the creditor's committee, said it represented "the only viable alternative to insolvency".