British Energy nears deal to avert financial collapse

British Energy, the nuclear power company, was last night confident it would clinch a financial restructuring deal in time to avert insolvency. The company has until tomorrow night to finalise terms with its banks and bondholders, who are owed about £1.2bn.

A company spokesman said: "We have got to get the creditors to sign up by Tuesday and we are confidence that will happen."

The privatised electricity generator was rescued from insolvency earlier this year thanks to a government loan. However the help was conditional upon the company agreeing to restructure its debt by 30 September, although it said forcing the company into administration was only one option.

The company was locked in talks with its creditors over the weekend to finalise terms of the debt-for-equity package announced in November.

Under the terms of the deal, British Energy will cancel £1.26bn of debt and issue £550m of new bonds with shareholders unlikely to receive more than 1 per cent of the company.

Meanwhile Powergen was tight-lipped over reports it was poised to make a move on Midlands Electricity after talks on a potential takeover by Scottish & Southern Energy (SSE) fell through.

Powergen, which already owns neighbouring East Midlands Electricity, could table an offer for Midlands within the next few weeks. However any new offer is thought likely to come in below the £1bn mark compared with SSE's £1.1 bn takeover, one report said. A spokeswoman for Powergen said the company did not comment on market speculation.