View the article online at http://citywire.co.uk/money/article/a319466
Centrica to raise £2.2bn to fund British Energy buy
Power giant raising money to bolster takeover kitty.
British Gas owner Centrica is aiming to raise £2.2 billion via a rights issue to help fund its participation in a takeover of UK nuclear power operator British Energy.
The group announced a fully underwritten rights issue of 1.4 billion shares at a price of 160p each, a discount of 39.9% to the theoretical ex-rights price of 266p, on the basis of 3 new shares for every 8 existing shares held.
Centrica said the rights issue was intended to help fund its 'vertical integration strategy, either through the potential acquisition of a 25% interest in British Energy or other vertical integration opportunities.'
The decision to carry out a rights issue follows the announcement recently from Centrica that it was in talks with French power giant EDF about taking a 25% stake in a subsidiary of the French group.
The subsidiary - Lake Acquisitions - made a recommended offer to buy British Energy in September.
If it did take part in such a venture, Centrica would need to pay £3.1 billion in total for a 25% stake.
Roger Carr, chairman of Centrica, said following the rights issue the group would be well-capitalised and able to fund the purchase of a stake in British Energy.
'Assuming we reach agreement with EDF regarding Centrica acquiring a 25% interest in British Energy, the proceeds of the rights issue will be directed towards this opportunity,' Carr said.
In reaction to the news, shares in Centrica were down 5.9% at 288.5p, by 09:42am, having dropped as much as 9.6% initially.
The Citywire guide to investment trusts
In association with Aberdeen Asset Management
More about this:
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.
by Gavin Lumsden on Mar 07, 2014 at 18:53