Meltdown averted

1 October 2003

The nuclear generator is not about to go under, and Brussels is unlikely to nix the plan. Britain s lights will stay on. Everyone has had to take a haircut. But bondholders appear to have come out best.

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British Energy's creditors agreed to a governmentbacked restructuring plan on Wednesday that will swap £1.4bn of the nuclear operator's debt for £700m of new bonds and 97.5% of BE's equity.

The government has said it will assume responsibility for BE's £3.9bn of nuclear liabilities. Stateowned BNFL will also reduce nuclear processing charges. The plan is contingent on Brussels' approval.

Shareholders will see their investment winnowed down to just a 2.5% stake in the restructured company. They can also get a warrant entitling them to subscribe to 5% of the company's capital.

Creditors that owned £408m of bonds will get £154m of new bonds and 52.3% of the restructured company. Bank debtors will get the rest of BE's equity, bonds that pay coupons but not principal, and an option over BE's Eggborough plant.

BE, which has 702m of shares, estimated its net asset value postrestructuring would be £334m.

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