Billions for Nuclear Clean-Up

Billions for Nuclear Clean-Up

Jun 19 - Dominion Post

The British Government has raised nearly (PndStlg)2.1 billion (NZ$5.5 billion) toward the cost of decommissioning the country's aging nuclear power stations after selling more than a third of its stake in British Energy.

The Department of Trade and Industry confirmed that 400 million shares in the nuclear power group had been placed with institutional investors at a price of 520p. The shares last traded at 536p.

It said the net proceeds of (PndStlg)2.08 billion would go, as expected, to the Nuclear Liabilities Fund.

The fund was set up at the time of British Energy's privatisation in 1996 to meet clean- up costs when the group's eight existing stations reached the end of their life.

The sale takes the government's stake in British Energy down from 64 per cent to 39 per cent. The stake will further fall to 36 per cent if the over-allotment option is exercised.

Citigroup, Deutsche Bank and Merrill Lynch ran the sale process. Lazard advised the government.

Analysts had expected the government to wait till early next year to begin the stake sale. However, the move was revealed late last week with news that British Energy's annual profits had jumped 44 per cent to (PndStlg)1.2 billion in the 12 months to March 3.

The move has sparked speculation that one of British Energy's foreign rivals will now swoop on the business, given its key role in Britain's nuclear future.

However, the government said last week that it wanted to keep a strategic stake of at least 29.9 per cent, effectively blocking any hostile move.

At least two to three new nuclear power stations are expected to be built in the coming years to meet Britain's growing energy needs. It is expected these will be on sites already owned by British Energy.

Scottish & Southern Energy, the gas and electricity power group, revealed it had already held talks with British Energy over what role it could play in any nuclear expansion.