Editor’s letter
Prior to British Energy’s annual general meeting in early August, a succession of newspaper articles appeared suggesting that bondholders had succeeded in pulling a fast one on the poor patriotic retail stock investors. The Daily Telegraph’s City column wrote: “[Shareholders] have the uneasy feeling that their company has been stolen from them, to the benefit of the moneylenders.”
Credit would like to publish the letter sent to The Daily Telegraph in response.
Sir, by your own admission when British Energy negotiated its debt restructuring “nuclear electricity cost more to generate than it fetched in the market”. As a result, shareholders could have subsidised the company themselves or handed it over to the creditors – they chose the latter. The situation is the same as negative equity: shareholders owned a house which was worth considerably less than their mortgage. Rather than bother paying off an expensive mortgage on a cheap house they defaulted and handed the house over to the bank.
But, in the past 11 months the price of electricity has risen and now “shareholders ... have the uneasy feeling that their company has been stolen from them.” What? Eleven months ago the shareholders decided to hand over the keys to what was, back then, a worthless property – it wasn’t just next to Sizewell, it was Sizewell.
You are now suggesting that the shareholders should ask for their house back. But you fail to appreciate that they have not been “existing shareholders” since this plan was agreed 11 months ago.
The Daily Telegraph replied:
Sir, not quite, I think. If shareholder approval was one of the conditions of the deal, then it’s not done until that condition is satisfied. If the BE board (suitably incentivised) uses delisting to get round that condition, I think it’s fair to say the shareholders are being robbed. This deal gives your readers a windfall they neither expected nor deserve.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Regulation
Industry calls for major rethink of Basel III rules
Isda AGM: Divergence on implementation suggests rules could be flawed, bankers say
Saudi Arabia poised to become clean netting jurisdiction
Isda AGM: Netting regulation awaiting final approvals from regulators
Japanese megabanks shun internal models as FRTB bites
Isda AGM: All in-scope banks opt for standardised approach to market risk; Nomura eyes IMA in 2025
CFTC chair backs easing of G-Sib surcharge in Basel endgame
Isda AGM: Fed’s proposed surcharge changes could hike client clearing cost by 80%
UK investment firms feeling the heat on prudential rules
Signs firms are falling behind FCA’s expectations on wind-down and liquidity risk management
The American way: a stress-test substitute for Basel’s IRRBB?
Bankers divided over new CCAR scenario designed to bridge supervisory gap exposed by SVB failure
Industry warns CFTC against rushing to regulate AI for trading
Vote on workplan pulled amid calls to avoid duplicating rules from other regulatory agencies
Bank of Communications moves early to meet TLAC requirements
China Construction Bank becomes last China G-Sib to release TLAC plans
Most read
- Top 10 operational risks for 2024
- Top 10 op risks: third parties stoke cyber risk
- Japanese megabanks shun internal models as FRTB bites