BE bosses lay down the law

NEARLY a quarter of a million shareholders in British Energy could be sued if they oppose the stricken nuclear generator's controversial bail-out by the taxpayer.

Bondholders are threatening to take legal action against individual investors who block the controversial deal that will leave shareholders with just 2.5% of the company.

British Energy, the country's largest electricity supplier, owes about £1.5bn. It has sent a letter to shareholders ahead of an extraordinary general meeting warning them that they could face significant claims if they 'procure a breach of the agreement or otherwise unlawfully interfere with its due performance. No assurance can be given that there is no risk of such claims being successful.'

British Energy and the bondholders argue that they have a legally binding contract and that any attempt to undo it is unlawful.

The company was on the brink of going into administration following a collapse in wholesale energy prices until the Government stepped in with a £410m rescue package, later increased to £650m.

Mervyn Davies, 69, has owned shares in British Energy since its flotation in 1996, and is one of the outraged small investors. He said: 'I thought I was only liable to lose my investment and here they are threatening me with legal action. I think the tactics are heavy-handed. I am aware that shares can go up or down, but what annoys me is that people are going to walk away with their pockets full and the owners of the company get next to nothing.

'I am a pensioner. I cannot afford to lose more than my shares.'

Davies, who lives near Windsor, Berkshire, said the threat of legal action had dissuaded him from voting for the emergency general meeting resolutions on October 22.

One lawyer familiar with the situation said: 'Inducing a breach of contract is actionable and you can be sued for it. It is possible the bondholders would have a claim against other shareholders who voted against the restructuring plan. That doesn't mean they would pursue the claim.'

In practice, it would be unlikely that bondholders would go after small shareholders, he added.

MPs last month criticised British Energy directors, headed by chairman Adrian Montague, who stand to share six-figure bonuses if the taxpayer-funded deal goes ahead.