British Energy investors urged not to block deal

Bondholders in British Energy, the beleaguered nuclear generator, have warned shareholders not to block the restructuring at an investors' meeting this week.

Bondholders in British Energy, the beleaguered nuclear generator, have warned shareholders not to block the restructuring at an investors' meeting this week.

Last week Polygon, a US hedge fund that has built up a 5.6 per cent stake in the utility, launched a public attack on the board. According to weekend reports, it is preparing a legal bid to block the deal that would see shareholders get 2.5 per cent of the company with the remainder going to bondholders and senior creditors.

But an adviser to bondholders who have set up an informal grouping warned that speculative investors such as Polygon would lose more if they blocked the deal. British Energy has said that if shareholders do not vote for the £5bn restructuring, it would delist from the stock exchange and restructure without shareholder consent.

The company faces a showdown with angry investors at its annual meeting in Edinburgh on Thursday. The board also faces the wrath of 230,000 small investors who have seen the shares lose 90 per cent of their value since 1996. Other institutional investors, such as the fund manager Invesco Perpetual, are keen to get their point across.