Rebels threaten British Energy

REBEL investors in ailing nuclear power group British Energy plan to take it to court over threats to quit the stock market.

It has also emerged that the firm, which produces one fifth of the UK's electricity, has been holding secret meetings with the European Commission about an alternative restructuring plan for the company, which includes an offer to buy out its £800m debt.

Shareholders, including US investment group Brandes and hedge fund Polygon, which represent 10.2% of British Energy, have demanded that the board call an extraordinary general meeting. They want all shareholders to vote against a £5bn restructuring plan to take the company off the stock market and sell its assets.

Unless rebel shareholders can persuade the EC to back their offer, the EC is expected to approve the existing government rescue plan, which would leave shareholders with just 2.5% of equity.

The rebel shareholders would arrange bridging finance of £800m to buy the £400m of debt value of bondholders, who would receive new shares instead. Polygon claims their deal will be better for taxpayers because it means government contributes less to the long-term decommissioning liabilities.