British Energy has issued a letter calling an Extraordinary General Meeting of its shareholders to approve a resolution that would see the company extend its borrowing to £1.6 billion.
In the letter to shareholders, BE chairman, Robin Jeffrey said that if the proposed resolution is not approved then the company may need to cease trading.
On September 9th 2002, BE was given a loan of £410 million by the UK government to provide working capital that would stabilise its trading position in the UK and North America.
On September 26th 2002, BE reached an agreement to extend its credit facility to £650 million to provide working capital for the business and collateral to further support trading operations. The current loan will mature on 29 November 2002.
Discussions between the government and BE regarding longer term restructuring of the company are said to be continuing.
In his letter to BE shareholders, Mr Jeffrey stated: ‘If these discussions are not successful, and there can be no guarantee that they will be, the company may be unable to meet its financial obligations as they fall due and therefore the company may have to take appropriate insolvency proceedings.
‘At this stage there can be no certainty about the final shape of any restructuring or whether it will preserve value for investors.’
The EGM will be held at on Monday 4 November at the Murrayfield Stadium Conference Centre, Edinburgh.