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
September 12 2003
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: Proposed Disposal
dated September 12 2003
Exhibit No. 1
11 SEPTEMBER 2003
British Energy plc ("British Energy")
Proposed Disposal of Interest in AmerGen Energy Company, LLC
The Board of British Energy (the "Board") announces that British Energy and
certain of its subsidiaries have entered into an agreement to dispose of British
Energy's entire 50 per cent. interest in AmerGen Energy Company, LLC ("AmerGen")
to FPL Energy, LLC ("FPL Energy"), which is a wholly-owned subsidiary of FPL
Group (NYSE: FPL), for approximately US$277m (GBP174m). The disposal of British
Energy's interest in AmerGen will be effected through the sale of its
subsidiary, British Energy U.S. Holdings Inc. ("BEUSH"), to an affiliate of FPL
Energy.
AmerGen is engaged in the ownership and operation of nuclear power generation
plants in the United States of America.
The proposed transaction is subject to a right of first refusal (the "ROFR")
held by Exelon Generation Company, LLC ("Exelon"), British Energy's partner in
AmerGen. Under the limited liability company agreement (the "LLC Agreement")
relating to AmerGen, Exelon has the right to purchase British Energy's 50 per
cent. interest in AmerGen on the same terms as those offered by FPL Energy by
giving notice of its intention to do so within 30 days of receiving notice of
FPL Energy's agreement to purchase British Energy's interest in AmerGen.
Exelon's ROFR will terminate on 11 October 2003. In certain circumstances, break
fees of up to US$8.295m will be payable by British Energy to FPL Energy in the
event that the transaction with FPL Energy is not completed including as a
result of Exelon exercising its ROFR to acquire AmerGen.
Under the LLC Agreement, in lieu of exercising its ROFR, Exelon has the right to
elect to participate in the sale of British Energy's interest in AmerGen (the "
Tag-along Right") on the same timetable as the ROFR. If Exelon were to exercise
its Tag-along Right, the consideration offered by FPL Energy for a 50 per cent.
interest in AmerGen would be applied pro rata to the interests of British Energy
and Exelon, leaving each with a 25 per cent. interest in AmerGen.
Closing of the proposed transaction with FPL Energy is subject to approvals from
The Secretary of State for Trade and Industry (the "DTI"), the Nuclear
Regulatory Commission, the Federal Energy Regulatory Commission (the "FERC") and
the Federal Communications Commission and requires clearance under the
Hart-Scott-Rodino Antitrust Improvements Act and the New Jersey Industrial Site
Recovery Act. In addition, the parties will not be obliged to complete the
transaction if a material adverse effect (as defined in the agreement) on
AmerGen or BEUSH or certain other specified adverse effects occur prior to
closing. Completion of the transaction is also subject to approval of the
disposal of British Energy's interest in AmerGen by the shareholders of British
Energy, where required.
The Board expects that it will require approximately six months to obtain the
necessary regulatory approvals for a disposal of its interest in AmerGen to FPL
Energy.
If the sale to FPL Energy is completed, British Energy expects to receive cash
consideration of approximately US$277m (GBP174m), subject to adjustments
relating to working capital levels, unspent nuclear fuel, capital expenditures
and low-level waste disposal costs at the time of closing. The proceeds of the
transaction are expected in the first instance to be used to repay the sums made
available to British Energy under the DTI credit facility entered into on 26
September 2002 and subsequently extended (the "Facility") (if any) and the
remainder will be retained for working capital and collateral purposes.
As at 31 March 2003, British Energy had recorded its 50 per cent. interest in
AmerGen in its accounts, where it is classified as an "Interest in joint
venture", at a net asset value of GBP71m. AmerGen's loss before tax
(post-exceptionals) in the year ended 31 March 2003 was GBP5m. Taking account of
parent company funding and working capital in AmerGen's US holding company that
is being disposed of as part of the transaction, the total net asset value of
assets as at 31 March 2003 subject to the transaction was GBP67m with an
attributable loss before tax (post-exceptionals) for the year ended 31 March
2003 of GBP7m.
The sale of British Energy's interest in AmerGen is one of the conditions to the
proposed restructuring agreed in principle with the creditors of British Energy
and the DTI on 14 February 2003.
The Board believes that such a restructuring of the Group offers the best
available opportunity to achieve the long term financial viability of the
British Energy Group. However, the proposed restructuring requires British
Energy to reach formal agreement with a large number of creditors with respect
to diverse financial interests, as well as a successful disposal of British
Energy's interest in AmerGen.
If the transaction is not completed, such agreements with creditors cannot be
reached, the required approvals for the restructuring are not forthcoming, the
assumptions underlying the restructuring proposal are not fulfilled or the
conditions to the Facility or restructuring are not satisfied or waived within
the timescales envisaged, British Energy may be unable to meet its financial
obligations as they fall due and consequently may have to take appropriate
insolvency proceedings. If insolvency proceedings are commenced, the
distributions to unsecured creditors may represent only a small fraction of
their unsecured liabilities and there is highly unlikely to be any return to
shareholders. Even if the restructuring is completed, the nature and extent of
the return (if any) for existing shareholders will need to be agreed by the
creditors whose claims are to be exchanged for new shares and bonds in the
restructured group. In any event, the return (if any) for existing shareholders
is likely to represent only a very small percentage of the equity of the
restructured group and a very significant dilution of their existing positions.
Notes to Editors:
The proposed sale of AmerGen was first announced in September 2002 when British
Energy and Exelon, partners in AmerGen, announced their intention jointly to
sell their investment in AmerGen. The disposal process did not attract suitable
offers and, together with Exelon, British Energy terminated this process earlier
this year. The transaction announced today is the result of British Energy's
plan, announced in March 2003, to realise the value of its 50 per cent. interest
in AmerGen independently from Exelon.
The completion of the sale of British Energy's interest in AmerGen is a
condition to the restructuring proposals announced on 14 February 2003.
AmerGen is an "Exempt Wholesale Generator" under the Public Utility Holding
Company Act of 1935, a "public utility" under the Federal Power Act and has a
market-based rate wholesale power sales tariff on file with the FERC.
AmerGen was established on 18 August 1997 by PECO Energy Company ("PECO") and
British Energy to acquire and operate nuclear-powered generating plants and
other associated assets in the United States. PECO's interests in AmerGen were
transferred to Exelon in connection with its merger with Unicom Corporation in
2000.
AmerGen owns three nuclear power generation plants in the United States:
- Clinton Power Station, a 1,017 Net Average Megawatts Electrical ("MWe")
Boiling Water Reactor, purchased from Illinois Power Company on 15 December 1999
- Three Mile Island Nuclear Station Unit 1, an 837 MWe Pressurized Water
Reactor, purchased from FirstEnergy Corp. ("FirstEnergy", which includes
FirstEnergy Corp., its predecessors and subsidiaries, including GPU, Inc.) on 20
December 1999
- Oyster Creek Nuclear Generating Station, a 627 MWe Boiling Water Reactor,
purchased from FirstEnergy on 8 August 2000
FPL Group, with annual revenues of more than US$8 billion, is nationally known
as a high-quality, efficient and customer-driven organization focused on
energy-related products and services. With a growing presence in 24 states, it
is widely recognized as one of the premier power companies in the United States.
Its principal subsidiary, Florida Power & Light Company, serves more than 4
million customer accounts in Florida. FPL Energy, LLC, an FPL Group
energy-generating subsidiary, is a leader in producing electricity from clean
and renewable fuels. Additional information is available on the Internet at
www.fplgroup.com, www.fpl.com and www.fplenergy.com.
Contacts:
Paul Heward +44 1355 262 201 (British Energy, Investor Relations)
Andrew Dowler +44 20 7831 3113 (Financial Dynamics, Media)
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: September 12 2003 BRITISH ENERGY PLC
By:____Paul Heward____
Name: Paul Heward
Title: Director - Investor Relations