FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
August 5, 2004
BRITISH ENERGY PLC
(Registrant's name)
3 Redwood Crescent
Peel Park
East Kilbride G74 5PR
Scotland
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F..X.. Form 40-F.....
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ..... No ..X..
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b):
Exhibit Index
The following document (bearing the exhibit number listed below) is furnished
herewith and is made a part of this Report pursuant to the General Instructions
for Form 6-K:
Exhibit Description
No. 1 RNS Announcement, re: AGM Statement dated 5 August 2004
05 August, 2004
British Energy plc
Annual General Meeting
At today's AGM, Adrian Montague, Chairman, said: "Those of you who were here
last year will recall that I explained the difficult steps that the Company was
taking in the face of its need to restructure. Much work remains to be done, but
over the past 12 months we have made considerable progress both in agreeing and
implementing our restructuring proposals.
In the last financial year, we had a small UK operating profit of GBP57m and a
total group operating profit for continuing activities of GBP340m. This compared
to a loss of GBP3.9 billion in the prior financial year following a GBP3.7
billion write down of our UK generating plant. The improvement in our results
over the year is due in part to the partial reversal of that write down, which
in turn reflects the improvement in the UK generation market.
We take some satisfaction from these results, but there is a great deal more to
accomplish before any of us will be content. It has been a turbulent 12 months
in the power market. There seems little doubt that prices have turned and the
era of cheap energy has ended, at least for now, as the market moves to a period
of structurally higher prices. Our ability to benefit from the rise in prices is
heavily conditional upon the reliability of our plant, which we are seeking to
sustain and improve through our Performance Improvement Programme (or PiP, as it
is known in the Company).
In all circumstances, safety is our number one priority. British Energy seeks to
operate to world-class safety standards. So it is disappointing to have to
record that, during last year, our performance against key industrial safety
indicators declined slightly. As you would expect, this is being addressed as an
important part of the Performance Improvement Programme". "Many of you will have
seen our announcement last week reducing our target output for the current year
from 64.5 TWh to 61.5 TWh. We all know that British Energy has to change. In my
judgement, everyone at British Energy is ready to embrace the change we need if
British Energy is to re-establish itself as a safe, profitable and proud
generator of emissions-free power."
"But, inevitably, much of the last year has been preoccupied with our
restructuring, and I would now like to give you an update as to where we are in
that process.
As I am sure you know, we reached agreement with our major creditors, BNFL and
with the Government on the plan for the proposed restructuring, and the formal
agreements were entered into last October. Last December, we sold our interest
in AmerGen, and that satisfied a major condition for the Government's support of
the plan. However, other important conditions remain to be fulfilled.
Prominent among these is approval by the European Commission of the
Restructuring Plan. We understand from the Government that their discussions
with Brussels are making steady progress and that it now expects the Commission
to reach its conclusion early in the Autumn.
The restructuring agreements are also conditional on our satisfying the
Secretary of State that the company will be viable in the future without access
to additional financing. And we also need to finalise the mountain of documents
with our creditors, obtain court approval and complete the successful listing of
the new shares and bonds. Altogether, there is a huge volume of work to be
undertaken in order that we can complete the restructuring by 31 January 2005,
at the latest.
With this January deadline in mind, we expect that the public documentation - in
particular listing particulars for the relisting of the Company, and the
circular convening general meetings of shareholders and bondholders - will be
published in mid-Autumn.
So what does the formal restructuring plan mean to you, our shareholders?
Firstly, and as I have mentioned before, it will mean a very significant
dilution of your share interests. Under the agreed proposals, certain of our
major creditors have agreed to extinguish their unsecured claims against the
group amounting to GBP1.3bn in total, in exchange for: GBP425 million of new
bonds, at least 97.5% of the issued ordinary shares of the restructured group,
and (in the case of creditors with claims relating to our Eggborough subsidiary)
an option to purchase the Eggborough coal plant in 2010.
If you, our shareholders, approve the implementation of the restructuring plan
in one of the ways explained in our announcement last October, shareholders will
receive new ordinary shares equal to 2.5% of the capital of the restructured
group, together with warrants to subscribe for a further 5% of the share
capital, or just the warrants, depending on the level of support achieved. This
is rather complicated territory, which I will mention only briefly today, but
which we will explore at length at the EGM that we'll convene later in the year
to give final effect to the restructuring.
We all have to recognise that last October the company was kept alive by the
Government and its creditors because we had committed ourselves to the
restructuring plan. But for the restructuring plan agreed then, I believe the
company would already be in administration, and shareholders would then receive
nothing. In reality, Ladies and Gentlemen, the restructuring plan secured the
company's survival. We would not be here today unless we had signed up last
October.
We took the negotiations to the wire. In fact, the existing shareholders'
retained interest was the last point to be settled after many hours of fraught
discussion as, right to the end, several of our creditors resisted fiercely the
notion of shareholders getting any shares at all in the company going forward.
The FT caught the flavour of the discussions when, in the Lex column for 2
October, it said "British Energy's bondholders are grumbling that shareholders
have got more than they should". Just shows how things can change in a few,
short months, doesn't it? In fact, you will find that what we achieved compares
well with other restructurings in the London market recently. So, although this
is still a bitter pill to swallow, I am satisfied that we could not have
achieved more for shareholders when these arrangements were concluded last
October.
At this point, I think it is appropriate to address two other issues that have
become the subject of some discussion recently.
First of all, there has been speculation that a change to the listing rules of
the UK Listing Authority might mean that the Company would be required to seek
the consent of shareholders in order to de-list its existing shares, if that was
necessary to complete the restructuring. I would like to say a few words on this
topic.
In our announcement on 1 October last year, we explained that the Restructuring
could proceed by one of three routes depending on the level of support from
existing shareholders. The third of those routes, which we refer to as the
Delisting Route, requires no support by way of a shareholder vote, relying on
the present form of the Listing Rules which simply provides for 20 business days
notice of delisting. Recent consultation papers published by the UKLA have
proposed the amendment of the Rules to introduce a requirement for shareholder
approval before a company's shares can be de-listed. And, in a statement issued
a few days ago on 30 July, the UKLA said it was considering whether transitional
arrangements would be appropriate for companies that had already announced that
they planned to de-list, but had not actually delisted before any new rule took
effect.
In our announcement of 17 June, we stated that our belief that the timescale for
the introduction of any new rule would not prevent the implementation of the
restructuring. In any event, if any rule change is accompanied by transitional
arrangements of the type referred by the UKLA in its statement last week, we
believe that the requisite advance warning has already been given by British
Energy, having regard to the several statements we have already made stating our
intention, if necessary, to delist to complete the restructuring.
If the rule change were to threaten to prevent implementation of the
restructuring, the Company would have little choice but to consider de-listing
its shares in advance of the rule change becoming effective. To fail to do so
could imperil the existing restructuring, and might expose the company to
further claims from its creditors. Of course, the Board is aware of the impact
that delisting would have on our shareholders, and we will not take that course
lightly. If we do need to delist early, shareholders will nonetheless be offered
the opportunity to approve the members' scheme and the disposal and, if
approved, to receive the proposed returns for shareholders provided for in those
cases.
That brings me to the second issue I would like to discuss. There has been
speculation that the restructuring will not, or perhaps ought not, proceed in
the form that I have outlined.
First, will the restructuring proceed?
As we have made clear throughout the restructuring process, and as I have again
made clear this morning, the restructuring itself is subject to a number of
significant uncertainties and important conditions. But we should place this in
its proper context. Of course, there remain some very significant steps to
overcome, but we have made, and are continuing to make, good progress. I cannot
tell you for certain that everything will go smoothly, as there are risks at
every stage that could prevent the proposed restructuring going ahead, but I
should say that the company intends to take all the steps open to it to bring
the present deal to fruition.
Next, should the restructuring proceed in its present form?
In the last few weeks, new shareholders have emerged who are contending that the
terms of the restructuring should be revisited. They say that the recent
increase in power prices has or ought to have made the company more valuable,
and therefore our creditors are getting a better deal than they fairly should.
As I said earlier, a marked contrast to where things were ten months ago!
I have to tell you that the company simply cannot pursue this line of argument.
The restructuring agreements we entered into with creditors, BNFL and the
Government are binding. We do not have a choice whether we wish to give effect
to them or not. There's simply no other viable course open to us. We entered
into these binding agreements in October 2003 - in return for keeping the
company afloat - when no other viable option was available. Those agreements
provided the very best that could be negotiated for shareholders at the time.
The only alternative was administration, and then shareholders would get no
shares at all. And the restructuring agreements require the Company to make all
reasonable efforts to implement the restructuring. As a result, the Company is
in no position to choose not to restructure on these terms, and we can't help
those who want to challenge the deal. We simply have to press on.
That concludes what I wanted to say to you by way of introduction. I'm sorry if
I've been very direct, but I felt that it was important that I told you clearly
how I see things. Of course, the Restructuring Plan is not before you for a
decision today. We won't be asking you to vote on it until later in the year.
But the points I have discussed are clearly the issues of the day."
For further information please contact:
John Searles
Investor Relations 01355 262202
Andrew Dowler
Media 020 7831 3113
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 5, 2004 BRITISH ENERGY PLC
By:____Paul Heward____
Name: Paul Heward
Title: Director - Investor Relations