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[cdn-nucl-l] British Energy to be given emergency loan extension
Posted on the Financial Times on September 23, 2002 and at:
British Energy to be given emergency loan extension
By Matthew Jones, Jean Eaglesham and Carola Hoyos
Published: September 23 2002 5:00 | Last Updated: September 23 2002 5:00
Ministers have agreed in principle to extend for two months a £410m
emergency loan for British Energy beyond its Friday expiry date.
The Financial Services Authority said yesterday it would step up its
probe into the conduct of the troubled nuclear generator, after it
emerged the company ignored advice to inform the market of its problems
for two days.
Whitehall insiders yesterday stressed that no final decisions had yet
been taken over the future of the company, which produces about a fifth
of the UK's power.
But the mood among ministers has swung against administration in the
past week. They believe the costs of putting British Energy into
administration would outweigh the risks to the taxpayer and are expected
to announce the extension of the financial lifeline this week.
Brian Wilson, energy minister, last night left an international energy
conference in Japan early to be in London for negotiations with British
Mr Wilson told the FT: "The question remains whether there is any logic
in allowing the nuclear industry to fade away in the UK at exactly the
time we are trying to increase our non-carbon sources of electricity
generation. I don't think it makes any sense."
Government insiders said an improved flow of information from British
Energy to officials had eased the government's initial frustration with
the company, which earlier this month threatened to go under unless it
received immediate financial support.
Ministers have also been influenced by offers last week by shareholders
and bondholders to support a restructuring of the company to avoid
administration. The loan extension is expected to be conditional on some
of British Energy's assets, including power stations, being provided as
A British Energy source said: "We are going into the final week of
negotiations with our confidence rising."
It has emerged that the company was advised by its broker ABN Amro to
inform the market of its financial problems two days before the
announcement was actually made.
The FSA, the financial regulator, is already investigating the
disclosure of British Energy's problems after the company told analysts
three weeks before it approached the government for help that its
finances were sound.
The FSA said: "We will be looking at the whole chronology of events in
the run-up to the announcement."
A British Energy official said the company was confident that both
itself and its advisers had behaved properly. It is understood investors
were not immediately told because the company was waiting for a decision
from British Nuclear Fuels on a fuel reprocessing deal and then spent a
day in talks with ministers.