British Energy posts £4.3bn loss
The struggling nuclear energy generator, British Energy, announced today that its losses have increased to £4.3 billion after having to slash the value of the company’s assets.
British Energy announced that in the year to the end of March the company made a pre-tax loss of £4.3 billion compared to a loss of £493 million in the year before. The company announced that £3.7 billion of the loss came from the write-down in the value of its nuclear power plants.
The company was saved by a £650 million loan from the Government September last year after it announced that it was in difficulties after the bottom dropped out of the wholesale electricity market.
British Energy was particularly affected by the fall in wholesale prices because, unlike other power companies, British Energy does not have a retailing operation that it could make up its profits in.
The company claimed that it has made ‘significant progress’ in its talks with the company’s creditors. However, the company’s chairman, Adrian Montague warned that much more still needs to be done to restructure the company.
Mr Montague stated, ‘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 also had to announce a deficit of £352 million in its company pension plan and that it would have to keep ‘pensions issues under close review’.
The company warned shareholders that the future of their investment still remained uncertain.
British Energy warned that if, for any reason, the company British Energy is unable to implement the restructuring plan, it may be unable to meet its financial obligations as they fall due, in which case it may have to take appropriate insolvency proceedings.
The company warned that if it were to commence insolvency proceedings, distributions to unsecured creditors may represent only a small fraction of their unsecured liabilities, and it was highly unlikely that there would be any return to shareholders.
British Energy claimed that even if the restructuring were completed, the return, if any, for shareholders would represent a very significant dilution of their existing investment.
