British Energy refuses to back down

THE board of struggling power company British Energy faces a dressing down from angry investors at a stormy annual meeting in Edinburgh this Thursday.

Shareholders are furious at a Government-backed £5 billion restructuring of the company that would see the equity holders lose out in favour of the company's bondholders.

While the restructuring is not up for discussion, shareholders are using the event to call on the board to reconsider the deal.

Hedge fund Polygon, which has a 5.6% stake in BE, told Financial Mail: 'We are going to make a lot of noise. The board just does not want to know, but we are going to be making our views very clear and will be asking them to reconsider their plans.'

Polygon is urging shareholders to vote against the restructuring later this year and to back a rival plan in which investors would put more money into the business and buy out the creditors.

Other investors, such as fund group Invesco Perpetual, are keen to get their point across. The board also faces the wrath of 230,000 small investors who have seen the shares lose 90% of their value since 1996. These shareholders will end up with just 2.5% of the company if the plans are voted through at a later meeting.

A spokesman for British Energy said that there was no going back.

'We had to sign a binding agreement with the creditors in October, without which the company would have gone into administration and shareholders could have ended up with nothing,' he said

If the vote goes against the plan, BE chairman Adrian Montague, who could receive a £700,000 bonus for the restructuring, will delist the company.