British Energy Share Discussion Threads

[quidzinn] 18/1/2005 10:17

oops yes just realised my error and have edited post #9109

[fbrj] 18/1/2005 10:13

quidzinn - why (163 - 98p x 2.1)/50??. Or more specifically the "minus 98p". You can sell your warrants at 163p x 2.1...you only pay the 98p if you want to convert the warrants into ords! Correct figure currently is...just under 12p in old share terms.

[martin036] 18/1/2005 10:03

As a matter of interest has anyone who held BGY shares in a nominee ac who opted for the new shares and warrants had these credited to their ac yet? Mine are with HSDL who say they wont appear in my ac till later today ( then again that is typical of their ineptitude )

[hightech] 18/1/2005 09:41

But the positive side is that oil price is around $50 so higher energy prices should stay - some of the assumptions may not be valid.

[martin036] 18/1/2005 08:24

and also
Evening Standard:
Relisted British Energy warns on battle ahead
Robert Lea, Evening Standard
17 January 2005
BRITISH Energy returned to the stock market today with its old shareholders all but wiped out and warnings from its chief executive that it will face a struggle.
After a controversial debt-forequity swap and multi-billion-pound restructuring, reconstituted shares in the nuclear generator started ticked up 1p to 286p, valuing the company at more than £1.6bn.

Trading in shares in British Energy, many of them held by socalled Sid small investors from the last the Tory Government's major privatisation, was halted in October priced at just 13½p after two years of tortuous negotiation that had seen the country's largest generator of electricity kept afloat by Government handouts and lines of credit of up to £650m.

Since the delisting, lenders and bondholders have swapped their mountain of debt for equity while shareholders have been given just one new share in the company for every 50 previously owned. Old shareholders have also been granted 2.1 warrants for every 50 shares held, and these can be converted to shares at a later date.

The City, and indeed British Energy's management, are uncertain about the company's future.

Chief executive Mike Alexander said: 'The restructuring has been successfully implemented but our job is far from over.' In a swingeing attack on BE's previous management led by ousted executive Robin Jeffrey, Alexander added: 'The new management team has started to address the past underinvestment and unacceptable output. We must put it right but it will not be easy and it will take time.'

Analysts at UBS say British Energy could be worth anything between 100p and 300p. Morgan Stanley has been advising investors to be cautious, putting a 210p a share tag on the company.

Its problems are legion. Because of the high fixed costs of producing nuclear power, it has become chronically loss-making. It is also tied into supply contracts at way below the prevailing price on the market. Production last year dived by 10% as the company struggled to deal with continuing maintenance problems.

There are grave doubts over the future of nuclear generation in the UK. All eight of its nuclear stations - it also owns the Eggborough coal-fired station in Yorkshire - are due to be decommissioned by 2020.

There is a moratorium on building new nuclear power stations although the Prime Minister has indicated the UK may have to build more if it is to get a balanced energy portfolio and reach an internationally agreed target of generating up to a fifth of the country's electricity from non-fossil fuels.

[martin036] 18/1/2005 08:23

and even:
Sun City:

NUCLEAR electricity generator BRITISH ENERGY made an iffy return to the stock market yesterday.
Shares were suspended in October ahead of a rescue deal in which creditors wrote off £1billion debts in return for new shares in BE.

Now the stock has been re-listed - but shareholders who previously owned 100 per cent of BE have just 2.5 per cent.

And, to make matters worse for the 260,000 private investors who still hold shares, the City gave BE the raspberry yesterday.

The shares closed at 263p despite earlier charging up to 286.

Philip Green, of broker Merrill Lynch, said BE was a high-risk investment because of ageing nuclear plants and swings in wholesale power prices.

He said: "In our view, the prospects of a turnaround are good, but the potential benefits appear to be fully discounted in the share price."

Andrew Wright, of broker UBS, said: "British Energy is seeking to address the legacy of a long period of under-investment.

"In 2004/05 the nuclear stations will deliver their lowest output since privatisation in 1996."

He said BE would need to invest some £250million to address this.

The company, led by chief executive Mike Anderson, generates a fifth of Britain's electricity.

It owns and runs eight nuclear power stations, including Dungeness, Kent; Hinkley Point, Somerset; Heysham, Lancs; Hunterston, Ayrshire; and Sizewell, Suffolk.

SUN CITY COMMENT: Small investors might as well hang on. Most of the damage to their investment has already been done. MARCONI shareholders who clung on after a similar shake-up have been rewarded for their patience.

[martin036] 18/1/2005 08:21

pc - you missed one ;-)

The Herald

Brokers' notes rob BE shares of energy

BEN GRIFFITHS January 18 2005

INVESTORS in British Energy were warned yesterday the nuclear power generator may be over-valued as shares in the newly re-listed group slipped on its return to the stock market.
Marking its re-entry to trading following a radical financial restructuring, the UK's biggest electricity producer was hit by a flood of bearish research notes from City analysts questioning its prospects. The stock closed at 268p, valuing British Energy at close to £1.5bn.
Stockbroker Cazenove estimated British Energy's fair value at just 200p per share, citing wholesale electricity prices, the reliability of its power plants and the potential to extend the working lives of nuclear power stations. All eight of British Energy's nuclear facilities are due to be decommissioned by 2020.
In a research note, Cazenove analysts said: "We see substantial downside pressure on the wholesale electricity price due to falling gas prices, and we are yet to be convinced that British Energy's UK nuclear fleet can be run at high load factors."
Also highlighting the potential downsides was broker UBS, which started its coverage of the revamped company with a "reduce" rating and a share price target of 225p. More bullish was Credit Suisse First Boston, which said the shares were worth 262p.
British Energy, which is headed by Mike Alexander, the chief executive, has already warned that the job of turning around the struggling business is far from over. Alexander has publicly criticised the previous management, including Robin Jeffrey, for past under-investment and unacceptable output.
The East Kilbride-based group delisted its shares in October to prevent US hedge funds from wrecking the restructuring. It was given the go-ahead last Friday to recommence trading by the High Court in Edinburgh, which approved a government-backed restructuring.
The arrangement saw British Energy's creditors and bondholders write off more than £1bn of borrowings in a debt-for-equity swap deal which left shareholders with just 2.5% of the company.
Investors were given just one share in the new British Energy for every 50 previously owned. Existing shareholders were also given 2.1 warrants for every 50 shares held, which can be converted into stock at a later date. Around 215,000 small investors still have a stake in the firm's future, including many from when the group was privatised by the Conservative government in 1996.
Without the successful completion of the life-saving deal, British Energy faced being made insolvent. It was taken to the brink in 2002 after a slump in wholesale electricity prices. Since then, power prices have recovered and nuclear power may be a beneficiary of a new international drive against carbon dioxide emissions, which are blamed for global warming. However, the company would have to overcome the current moratorium on building new nuclear plant.
In December, British Energy reported a pre-tax loss of £234m for the six months to 30 September, compared with £60m a year earlier.

[pc4900074200] 18/1/2005 07:32

The Scotsman. 18-01-2005.

British Energy makes less than confident return to trading.

NICK BEVENS.

SHARES in British Energy dropped yesterday, after the City handled them with care on their first day back trading on the London Stock Exchange.

The UK's largest power firm is back in after a £1 billion debt-for-equity restructuring, in what chairman Adrian Montague called "one of the most complicated restructurings in UK corporate history".

The shares opened at 286p, rose as high as 289p but slipped back to 263p as several analysts gave valuations below that level.

In December, British Energy reported a pre-tax loss of £234m, compared with £60m a year earlier, for the six months to 30 September, hit during 2004 by a number of "unplanned outages" or production halts at its power stations. These included stoppages for inspections at its Hartlepool and Heysham plants.

In an obvious swipe at BE's previous management led by predecessor Robin Jeffrey, chief executive Mike Alexander said: "The new management team has started to address the past under-investment and unacceptable output. We must put it right, but it will not be easy and it will take time."

Morgan Stanley gave an estimate of 210p and advised investors to be cautious. "Due to its very high fixed-cost base, British Energy has significant operational gearing. Financially, the company is highly exposed to both operational improvement and movements in UK power prices," the bank said in a research note.

Stockbroker Cazenove estimated 200p a share, citing wholesale electricity prices, plant reliability and plant lifetime extensions as the main value drivers. "We see substantial downward pressure on the wholesale electricity price due to falling gas prices and we are yet to be convinced that BE's UK nuclear fleet can be run at high load factors," Cazenove analysts said, while investment bank Credit Suisse First Boston tagged BE with a target of 262p.

pc

[pc4900074200] 18/1/2005 07:31

The Telegraph. 18-01-2005.

British Energy's shares storm back on to market.
By Aaron Patrick.

It may have destroyed several billion pounds in shareholder wealth, but investors flocked to British Energy yesterday when it relisted on the London Stock Exchange.

The nuclear power company staged an almost triumphant return, with trading in its shares opening at 286p and closing at 263p, and selling for as much as 289p. Turnover was heavy, as expected, as bondholders who had converted their debts into shares took their chance. British Energy was the third most popular company outside the FTSE 350, with 65m shares traded.

British Energy shares last traded this high in 2001, about a year before a slump in wholesale power prices pushed it towards the brink of insolvency. At its peak. the company was worth more than £5billion. It still supplies 20pc of Britain's power.

The company did nothing publicly to mark yesterday's event, merely issuing a few short regulatory statements required as part of the listing, and there had been no ceremony at the company's headquarters in Livingston, Scotland. Having been bailed out in one of the most complicated restructurings in UK history, it now has a market capitalisation of £1.7billion, the same as Cairn Energy.

Shareholders lost most of their money. They were, however, issued with warrants which give them the right to buy British Energy shares for 98p each until 2010.

The warrants are designed to allow shareholders to benefit if the share price goes up.

One shareholder, Malcolm Stacey, bought £5,000 of shares yesterday at 282p each. He lost £53,000 when the shares collapsed.

"I bought some more shares today because I take the view that management made such a mess of it last time that they must have learnt some lessons," he said. "I expected them to go up, but they're down about 7pc. They usually do when they relist."

Standard & Poor's rated the company's credit worthiness as "BB+", regarding them as a speculative risk. Stockbroking analysts have resumed coverage, and valuations range from £2 per share to £2.40.

Analysts say one of the main risks facing the company is that it may be forced to unexpectedly shut down a reactor for maintenance.

Because it agrees to provide electricity to customers, it is forced to buy power from other producers when its cannot produce enough itself. This can be very expensive.

Under the restructuring, creditors agreed to write off £775m of the money they were owned in return for 97.5pc of the company's shares.

pc

[pc4900074200] 18/1/2005 07:29

Guardian. 18-01-2005.

British Energy shares start trading - and falling - again.

Terry Macalister.

British Energy, Britain's largest electricity producer, yesterday made a downbeat return to the London stock market after an absence of three months and having tied up a £1bn rescue deal.
Shares in the nuclear power generator started trading at 286p but soon fell, and ended the day at 263p amid concerns about wholesale electricity prices and the condition of the company's power plants.

One broker, Cazenove, argued that a fair value would be closer to 200p, saying in a research note it was "yet to be convinced that BE's UK nuclear fleet can be run at high load factors".

BE, valued at less than £1.5bn at yesterday's stock price, has suffered problems at its Hartlepool and Heysham 1 power stations in recent months but all its plants were running normally last night. Management admits it is struggling to provide enough maintenance to prevent breakdowns at its eight ageing facilities which provide a fifth of the UK's electricity.

Credit agencies Moody's and Fitch assigned non-investment grade ratings to £550m of new bonds which have also been issued following the shake-up that passed its last legal hurdle on Friday.

Moody's gave a Ba3 rating and Fitch BB- to the bonds, due in March 2022, and which pay a coupon of 7%.

BE was driven to the brink of insolvency in 2002 after a huge decline in the price of wholesale electricity prices.

The government stepped in with a life-saving loan but the Scottish firm had trouble convincing investors about supporting the debt-for-equity scheme that left them with only 2.5% of the company.

On Friday, chief executive Mike Alexander welcomed the go-ahead for the restructuring from an Edinburgh court but added, "our job is far from over". He took a swipe at his predecessors, saying it would take time to correct "past underinvestment and unacceptable [power] output".

The plants risk being phased out by 2020 unless life extension agreements are given. There is a ban on building new atomic power stations, but some within the government are keen to see approval for a new generation.

The problems of BE have further damaged public confidence in nuclear power, but the fact that such plants emit no greenhouse gases has meant some critics have changed their minds. Global warming is a bigger problem, according to some experts.

pc

[pc4900074200] 18/1/2005 07:27

The Independent. 18-01-2005.

Re-listed British Energy is back with value of £1.46bn
By Michael Harrison, Business Editor

British Energy returned to the stock market yesterday with a valuation of £1.46bn after a financial restructuring which saw creditors seize control of the nuclear power generator.

The company had a market capitalisation of just £32m when its shares were delisted last October ahead of the massive debt-for-equity swap, which gives bondholders 97.5 per cent of the company.

Shares in British Energy opened yesterday at 286p as trading resumed but then dipped to 270p by lunchtime. They ended the day at 263p. Brokers urged investors to take a cautious approach to the shares with trading likely to be extremely volatile for the first few days.

Together with £700m of new debt, the re-listed company has an enterprise value of about £2.2bn.

The 286p opening price was towards the top end of the forecast trading range of 101p to 307p. Cazenove said that British Energy's fair value price was no more than 200p, arguing that falling wholesale electricity prices and reliability problems at some of the company's nuclear stations would hold back profitability. Credit Suisse First Boston put a target price of 262p on the shares.

The company has recently been forced to shut down reactors at its Hartlepool and Heysham 1 stations because of unexpected difficulties. British Energy is also vulnerable to price movements because it operates as a baseload generator.

Brokers at Cazenove said: "We see substantial downward pressure on the wholesale electricity price due to falling gas prices and we are yet to be convinced that BE's UK nuclear fleet can be run at high load factors."

British Energy ran into crisis in 2002 after the price of wholesale power plunged, making its nuclear stations uneconomic. It only survived with emergency credit lines from the Government and the transfer of £4.2bn in liabilities to a new state-run agency.

pc

[pc4900074200] 18/1/2005 07:21

Times on _. 18-01-2005

Tempus

British Energy is still a big turn-off for investors.
By Robert Cole

LONGSTANDING investors in British Energy will greet the relisting of shares in the nuclear generator with a mixture of frustration, bewilderment and anger. They will be frustrated because electricity prices, which fell far enough to put the company into dire financial straits, have now rebounded. They will be bewildered because the restructuring process was so tortuous. And they will be angry that their stakes in the company have been diluted almost out of sight. Those who bought the bog standard 300 shares at privatisation have stakes (in six new shares and twelve warrants) worth £37.48. Take account of dealing costs and that barely makes them even worth selling.
Many investors, having been burnt so badly, will be twice as shy. The company has changed radically, however. Not only do electricity price rises make life easier, but the restructuring has relieved the firm of weighty debts. Most crucially of all, the State has assumed responsibility for decomissioning the nuclear power plants. Clean-up costs did most to break British Energy in its previous incarnation. Meanwhile, a whole new team of senior managers is at the helm of the company.

British Energy has emerged from the refinancing much better placed to meet its obligations to generate one fifth of the nation's electricity. It is less clear, however, whether there will be much left over for shareholders. Electricity prices are high, but may not stay that way. The company sells about half its output on fixed-price contracts and as a result it is still selling some electricity at the low prices that prevailed in the past.

Meanwhile, the average life expectancy of the plants is only a dozen years and between £200 million and £250 million a year - about four times operating profit in the year to last March - needs to be spent on upkeep. Nonetheless, the unplanned interruptions in generating that have plagued British Energy may continue. Moreover, the Government will swipe 65 per cent of net profits as quid pro quo for taking on decommissioning. Shareholders' dividends will not come until 2007 at the earliest.

The share register is also stuffed with hedge funds that may want to liquidate positions. The overhang may weaken the reconstituted 263p share price. Avoid.

pc

[pc4900074200] 17/1/2005 17:42

Is wally123 around?

Could we have these in the header.






pc

[drewz] 17/1/2005 16:33

Get into nuclear.

You know it makes sense.

[fbrj] 17/1/2005 15:59

expiery...expriry ....or expiry?? The last date one can exercise the warrant - ie pay 98p for a new ord share (irrespective of what the ord share price is at the time).

[hightech] 17/1/2005 15:53

What does expriry date mean?

[fbrj] 17/1/2005 15:47

goggin - can't recall exact expiry date but sometime in 2007; exercise share price is 98p!

[martin036] 17/1/2005 15:46

goggin - 98p and 2007 I think.

[goggin] 17/1/2005 15:22

Does anyone know the exercise price of the warrents and expiery date please.

[pc4900074200] 17/1/2005 15:02

BGYW

pc

[praipus] 17/1/2005 15:01

Anyone know the EPIC for the new bonds?

[praipus] 17/1/2005 14:55

Karateboy - Not necessarily, I posted this earlier so apologies to those who have already seen it.

This is from the Ecofin Power & Water Opportunites ECW income share/ECWC capital shares (strong buy IMHO) monthly update 7/1/2005 for December, 2004.

"British Energy held an analysts presentation ahead of its planned re-listing in
2005. Overall, the message from management about the outlook for the
restructured group was one of cautious optimism. An investment programme
designed to compensate for previous years of under-investment should be
completed over the next three years, and management expressed confidence that
this would result in an improvement in plant reliability, overall operating
efficiency and group profitability. The re-listing remains on track for later
this month."

[karateboy] 17/1/2005 14:21

Market Cap of 1.6b Pounds is far too much specially considering that BGY sold its American and Canadian profit making elements. Any comments ?