Sections

British Energy denies buyout plan

Related images

  • British Energy denies buyout plan

UK - British Energy has denied it is planning to buy out its pension schemes in an attempt to improve its position as a possible takeover target.

Speculation about the possible buyout of its two defined benefit (DB) pension schemes - the British Energy Generation Group (BEGG) and the British Energy Combined Group (BECG) - surfaced following the breakdown of takeover discussions last week between the firm and EDF Energy.

Both EDF and British Energy confirmed on August 1 "advanced discussions" between the parties had failed to reach an agreement, despite approval from the UK government - still a minority shareholder in British Energy - for what it termed as a "good deal" which the government was "ready to accept" but which other shareholders opposed.

Following the breakdown of talks, speculation has surfaced suggesting British Energy is looking to offload it two DB schemes - with combined assets of £2.7bn (€3.5bn) - after the financial results for the year ending March 31 2008 showed the total scheme deficit had increased from £65 to £216m.

Today, a British Energy spokeswoman refuted such claims and said: "There has been speculation that British Energy has approached several pension buyout groups with the intention of selling our pension funds. I can confirm that neither the company nor the pension trustees are considering any proposal to sell the pensions funds to any buyout group."

The significant increase in the firm's pension deficit follows the latest triennial valuations, which resulted in the agreement with trustees of a past service deficit of £174m for the BEGG scheme and £3m for the BECG scheme from March 31, 2007.

To reduce the deficits, British Energy confirmed in the report it would begin annual deficit reduction payments of £35m to the BEGG scheme from April 1, 2008 to December 31, 2013, while additional contributions would be made to the BECG scheme following "appropriate funding advice".

The results revealed the company would pay £119m to the two schemes - including additional contributions - in the year ending March 31, 2009.

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2474

    Asset class: All/Large Cap Equities.
    Asset region: Global Developed Markets.
    Size: $150m.
    Closing date: 2018-09-25.

Begin Your Search Here