Counting the pennies

8 October 2003

The German utility is reportedly in talks to buy Midlands Electricity, the UK business that Scottish & Southern almost bought. Yet E.ON will struggle to improve the structure of SSE s bid, which hurt Midlands bondholders. The only other option is to pay more.

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Powergen, the German energy group, is in talks with creditors of Midlands Electricity about launching a £1.2bn bid to take over the business that Scottish & Southern almost bought last month.

Powergen, owned by E.ON, is reportedly offering bondholders, who are owed £660m, a better price than the 86p in the pound from SSE which they rejected last month.

SSE's deal would also have seen Midlands' US owners, Aquila and First Energy, being paid £43m but the deal was contingent on bondholder approval. Midlands' banks are owed £502m.

Powergen already controls East Midlands Electricity, a neighbouring distribution business.

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