British Energy's darkest hour

BRITISH ENERGY shares were suspended last night as the nuclear power generator warned that it may face insolvency if rescue talks with the Government fail. BE said there were reasonable grounds for believing the talks, which began on Wednesday, would succeed but added ominously: 'There can be no certainty that this will preserve value for investors.'

The suspension, which could last longer than a year, will infuriate BE's 237,000 shareholders, who are now locked into the stricken company. The board, led by executive chairman Robin Jeffrey, broke off from a crisis meeting in early afternoon, but there was no statement concerning BE's dire state until after the market closed.

More than 26m shares were traded in heavy dealing. They closed down 2 3/4p at 80 3/4p and are likely to plummet in grey market trading today.

For some time the generator has been lobbying the Government for £100m in tax breaks, including an £80m exemption from a tax on the gases that cause global warming. BE does not produce any of these 'greenhouse gases'.

Weak electricity prices have left BE's plants, such as Sizewell B in Suffolk, losing money. Technical problems have also hurt and without a cash injection, BE runs the risk of not being able to cover loans worth hundreds of millions due to be repaid next year.

It had hoped to run British Nuclear Fuels' ageing Magnox nuclear reactors, but revealed last night that it had been unable to agree terms with the State owned company.

BE is also looking to sell its 50% stake in the US nuclear power generator AmerGen. BE's partner in AmerGen, Exelon, is mulling over a sale and BE hopes to bundle its stake, worth some £250m, as a job lot.

BE was privatised by John Major's Government in 1996, the same year as the collapsed rail operator Railtrack.