British Energy bondholders to get £154.1 million in new bonds, 52.3% of stock

By Carlise Newman

Chicago, Oct. 1 - The British Energy group of companies said it has negotiated a restructuring that will result in the issuance of £425 million of new bonds.

The proposed restructuring was agreed between the Board of British Energy, certain creditors and the Secretary of State for Trade and Industry. Entering into the agreement on Wednesday were the company's bondholders, certain group companies, Enron Capital & Trade Europe Finance LLC, Teesside Power Ltd., Total Gas & Power Ltd., The Royal Bank of Scotland plc and British Nuclear Fuels plc.

The creditors have agreed to extinguish their existing claims against the group in exchange for a total of £425 million in new bonds and 97.5% of the issued ordinary shares of the restructured group.

The bondholders will trade their claims against the group in exchange for £154.1 million of new bonds and 52.3% of the ordinary shares of the restructured group.

Creditors will be able to transfer their rights under restructuring and their claims against the group after Oct. 31.

Eggborough Banks will trade their claims against the group in exchange for payments under a revised capacity and tolling agreement and an amended credit agreement, £170 million of new bonds, including £150 million of bond-equivalent payments through the amended credit agreement and 14% of the new ordinary shares in the restructured group.

Royal Bank of Scotland and the consenting bondholders will vote in favor of the restructuring scheme, and if approved, the claims of Royal Bank and all bondholders against the group will be compromised in exchange for £14.2 million of new bonds and 4.8% of the new ordinary shares.

Enron Capital will exchange its claims for £20 million in bonds and 7.7% of the new stock and Teesside Power will exchange its claims for £43.5 million in bonds and 6.8% of the stock.

The bondholders will be able to transfer any interest in their respective bonds provided that the transferee is already a consenting bondholder or agrees to be bound by the creditor restructuring agreement.

The ad hoc committee of bondholders consists of holders of £109.8 million of 5.949% guaranteed bonds due 2003, £163.4 million of 6.077% guaranteed bonds due 2006 and £134.6 million of 6.202% bonds due 2016.

The total number of new bonds issued and outstanding under the restructuring will be £700 million

The restructuring requires that bondholders and Royal Bank of Scotland holding at least 75% of the combined amount owing to them sign the restructuring agreement by Oct. 31 and agree to vote in favor of the restructuring scheme. Each bondholder who has signed the agreement is referred to as a consenting bondholder. The agreement is also subject to approval prior to Oct. 31 by the credit committee of Royal Bank of Scotland.

Under the creditor restructuring agreement, the standstill arrangements agreed with Royal Bank of Scotland, Eggborough Banks, significant creditors and British Nuclear Fuels plc regarding the standstill agreement entered into on Feb. 14 and with certain bondholders will continue on the previous terms until the restructuring becomes effective. The parties are restricted from taking any steps to demand or accelerate any amounts due until the earliest of Jan. 31, 2005 or 120 days from the satisfaction of the conditions of the restructuring.

Also, the parties will continue to be paid interest semi-annually but not principal of any claims against the group until completion of the proposed restructuring.

Under the government restructuring agreement, the Nuclear Generation Decommissioning Fund Ltd. - to be renamed Nuclear Liabilities Fund Ltd. - will assume financial responsibility for discharging certain of the group's uncontracted nuclear liabilities and the costs of decommissioning the group's nuclear power stations and the Secretary of State will assume financial responsibility for certain of the group's contracted nuclear liabilities and any shortfall in the Nuclear Liabilities Fund.

In consideration for the assumption of financial responsibility, the restructured group will issue £275 million in new bonds to the Nuclear Liabilities Fund. In addition, members of the group will pay to the Nuclear Liabilities fixed decommissioning contributions of £20 million per year, £150,000 for every ton of fuel loaded into the Sizewell B reactor after completion of the restructuring and an annual contribution equal to a percentage of the group's adjusted cash flow, initially and not to exceed 65%.

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