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03/06/2003
Emergency lighting dims as British Energy reports £4.29bn loss
British Energy has announced dismal pre-tax losses of £4.29 billion for the year ending March 2003 - compared to £493 million losses in 2001-2002.
The stricken electricity power company attributed the massive losses to a substantial write-down in the value of its power plants and several other financial write-downs including funds set aside for decommissioning.
The report noted £3.59 billion had been wiped off the value of the company’s nuclear assets and a further write-down of £151 million for Eggborough.
Excluding the write-downs, British Energy lost £130 million in the last financial year, compared to a profit of £42 million in the preceding year.
The company statement noted that despite “significant progress” the proposed restructuring remains subject to a large number of “significant uncertainties”.
British Energy's statement warned: “If, for any reason, British Energy is unable to implement the restructuring, it may be unable to meet its financial obligations as they fall due, in which case it may have to take appropriate insolvency proceedings.
"If British Energy were to commence insolvency proceedings, distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities, and it is highly unlikely that there would be any return to shareholders. Even if the restructuring is completed, the return, if any, for shareholders will represent a very significant dilution of their existing interests."
In his comments in the report the Chairman of British Energy, Adrian Montague, said: “The past year has been traumatic for British Energy and its stakeholders. The combination of high fixed costs for our nuclear stations and a steep decline in power prices without the counterbalance of owning a retail supply business, together with a high level of unscheduled outages and a bleak outlook for future power prices, has resulted in terrible damage to our company.”
British Energy is in the process of a major restructuring programme, but it looks increasingly likely that the company will end up in the hand of its creditors with shareholders left with no return on their stake.
Last year the UK government bailed out British Energy with a controversial £650 million loan. This cash injection saved the company from complete financial collapse, but the loan is currently under investigation by the European Commission to assess if it contravenes EU regulations on the granting of state aid to commercial enterprises.
(SP)
The stricken electricity power company attributed the massive losses to a substantial write-down in the value of its power plants and several other financial write-downs including funds set aside for decommissioning.
The report noted £3.59 billion had been wiped off the value of the company’s nuclear assets and a further write-down of £151 million for Eggborough.
Excluding the write-downs, British Energy lost £130 million in the last financial year, compared to a profit of £42 million in the preceding year.
The company statement noted that despite “significant progress” the proposed restructuring remains subject to a large number of “significant uncertainties”.
British Energy's statement warned: “If, for any reason, British Energy is unable to implement the restructuring, it may be unable to meet its financial obligations as they fall due, in which case it may have to take appropriate insolvency proceedings.
"If British Energy were to commence insolvency proceedings, distributions, if any, to unsecured creditors may represent only a small fraction of their unsecured liabilities, and it is highly unlikely that there would be any return to shareholders. Even if the restructuring is completed, the return, if any, for shareholders will represent a very significant dilution of their existing interests."
In his comments in the report the Chairman of British Energy, Adrian Montague, said: “The past year has been traumatic for British Energy and its stakeholders. The combination of high fixed costs for our nuclear stations and a steep decline in power prices without the counterbalance of owning a retail supply business, together with a high level of unscheduled outages and a bleak outlook for future power prices, has resulted in terrible damage to our company.”
British Energy is in the process of a major restructuring programme, but it looks increasingly likely that the company will end up in the hand of its creditors with shareholders left with no return on their stake.
Last year the UK government bailed out British Energy with a controversial £650 million loan. This cash injection saved the company from complete financial collapse, but the loan is currently under investigation by the European Commission to assess if it contravenes EU regulations on the granting of state aid to commercial enterprises.
(SP)
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