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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.
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by Gavin Lumsden on Dec 10, 2013 at 16:51