Rescue bill from British Energy's advisers to hit £130m

The troubled nuclear power group British Energy has so far paid out £72m in advisory fees for work on its rescue restructuring -- £1m more than it lost in the first six months of the year. The process could cost it an estimated £130m in total.

The disclosure came as British Energy, which provides about one fifth of the UK's electricity, warned the cost of outages at its Heysham reactor on the Lancashire coast and its Sizewell plant in Suffolk had risen to £95m from £50m. It also revised its output forecast for the year down to 65.5 terawatt hours from 67 as a result of the outages. Heysham is not expected to be back on line until the first half of February.

British Energy yesterday announced a pre-tax loss of £71m for the six months to 30 September, considerably lower than the loss of £337m it recorded in the same period a year before.

The company booked an exceptional charge of £37m in the period to cover advisory fees and other costs relating to the planned restructuring. It shelled out £7m in the same period last year and another £28m in the second half, bringing the total bill to £72m.

Aside from its own advisers, Citigroup and Clifford Chance, it is also paying CSFB and Slaughter and May, who are the Government's advisers, as well as Close Brothers, the adviser hired by the company's bondholders.

The planned restructuring process, which could cost it another £60m, will see bondholders and banks seize control of the business by cancelling £1.3bn of debt in return for 97.5 per cent of the business and £275m of bonds. The proposed move, which will leave shareholders with just 2.5 per cent of company, hinges on a number of factors, including EU approval.

In the meantime, it is due to get a payment of about $268m (£153m) for the sale of its 50 per cent stake in its AmerGen business "shortly". It was also forced to ask the Government for more credit last month. The Government granted a temporary increase in its credit facility to £275m from £200m.

British Energy also said yesterday pre-tax profits for the year would come in below the board's previous expectations because of higher inflation levels. It expects operating profits to be in line with its expectations.