British Energy rebels turn up the heat
BRITISH Energy faces a shoot-out with leading shareholders next month after dissident hedge fund Polygon and US investor Brandes said they wanted an extraordinary general meeting of the company.
Plans by the rebel shareholders to overturn British Energy's current rescue plans sent the shares up 2 1/2p to 25p, a two-year high.
The nuclear generator, which produces a fifth of the country's electricity, is attempting to stave off insolvency by going through a Government-supported debt-for-equity swap that all but wipes out the holdings of equity investors in the former FTSE 100 company.
Polygon has spent the summer trying to whip up support to scupper those plans in a bid to restore some value for the company's long-suffering shareholders.
The first step will be an attempt to humiliate British Energy's board, led by Government fixer Adrian Montague, and get its restructuring plans thrown out at an EGM which may have to be called for late October.
The board-proposed restructuring depends on a number of factors, including getting the permission of the European Commission to allow British State aid.
Polygon and Brandes, with the tacit support of another major shareholder, fund manager Invesco, speak for more than 20% of the company and are hoping for support among the group's 230,000 private investors. They have been lobbying Brussels to get support for the plans, which they say will save taxpayers' money.
Polygon wants the company to tear up its current plans and accept an alternative scheme to inject up to £800m of bridging finance, to buy off bondholders. That, it argues, would kick-start the shares, which in turn could be used to launch a rights issue to pay back the bridging loan and recapitalise the company.
It also wants the EGM to stop the board from delisting the company if it does not get its way. Polygon argues that the original restructuring plan has been rendered obsolete by the recovery in the price of electricity.
British Energy today countered: 'If for any reason the proposed restructuring cannot be implemented, the board may need to commence insolvency proceedings...[in which] it is highly unlikely there would be any return for shareholders.'
