British Energy shares – Advice sought please

Woggy67

Hi,

When my Dad died a few years ago I was gifted some shares in his will. I kept them rather than selling because he was an ex-energy worker himself and every time a dividend came through it was a nice reminder of him. Anyway, I haven’t really kept up to date with what has been happening with British Energy as I have been studying for a degree, but this weekend I looked at some old paperwork and it seems that the 495 shares I had, worth at the time around £5 per share have been devalued to nothing, yet British Energy are still trading at £5 per share!

Upon reading the old documentation it seems that the company went through a restructuring in 2004 because its assets were half that of its stockmarket value?! I don’t really understand this at all. From here on it looks like what I thought was a dividend cheque in 2005 turned out to be final payment for my Warrants and Ordinary shares.

One document dated January 2005 states that my original Ordinary share certificates should now be destroyed, which will of course be a very sad thing for me to do. Before I go ahead and do this I wondered if anyone else is a little confused by all that has happened here and whether anyone out there can shed any light and possibly offer any advice.

I realise I should have paid more attention to what has been going on with the British Energy shares, but you could say my mind has been elsewhere i.e. passing my degree. That said I am struggling to get my head round the fact that my late father’s shares, which he worked hard for and were worth around £2500 have been devalued to a measly payment of £106 and yet British Energy are still trading at over £5 per share!

It states that I should seek advice from a stockbroker if I am unclear about anything. However, I guess that will cost quite a bit and may not be worthwhile. Hence, any comments/advice gratefully received.

Thanks

Woggy67

Jonesya

Woggy67 wrote: »

That said I am struggling to get my head round the fact that my late father’s shares, which he worked hard for and were worth around £2500 have been devalued to a measly payment of £106 and yet British Energy are still trading at over £5 per share!

I think this is because most of the original shareholders equity was lost during the restructuring - the shares currently trading at £5 are not equivalent to the shares you owned.

There's more info on Wiki:
http://en.wikipedia.org/wiki/British_Energy

LardyCake

As an ex BE (British Energy) employee and still a shareholder, this is a sore subject with me and I will try not to go off into a rant too much.

Basically BE ran into financial difficulties a few years back (mainly because the wholesale price of electricity had fallen), the government imposed a company restructuring in return for aid.

The restructuring cancelled the existing shares and gave shareholders shares in a new BE company at the rate of 2 shares and, I think, 2.5 warrants in the new company for every 100 held in the old company. (the warrants allow you to buy shares in the new BE at a fixed discounted price before a certain date).

Shareholders were denied a fair vote on this restructuring (by the device of threatening to de-list the company and pay shareholders nothing if they voted against), they did however have to choose if they wanted the new shares or have the shares in the new company sold for them and receive the money (I think the latter was the default action - and this presumably happened with your Dads shares).

The bulk of the shares in the new company were issued to BE bondholders and the government. By the time the restructuring took place the wholesale price of electricity had risen again and BE was a profitable company.

From an old BE shareholders point of view we were robbed of a large part of our investment in the company by the bondholders (banks & hedge funds) and government. That is how your Dads £2,500 turned into £106.

...just noticed someone has posted a link while I have been writing this, which no doubt will give you a more reasoned and objective explanation.

Woggy67

To Jonesya and LardyCake,

Many thanks for taking time out to explain the situation and offer that useful link.

I now think I understand what has happened. 'Understand' being one word, but 'unhappy' probably being a better one to truly describe my feelings.

I can fully understand your feelings LardyCake. This seems a preposterous situation to be in with fuel prices on the rise and the business now trading at a high again. It feels like those shareholders who supported the company have had the rug pulled from beneath their feet.

As you can imagine this is an emotive subject for me also. At least I now know that I am not alone and that I couldn't have done anything about it anyway.

I still have my Dad's old share certificate and my memories. They are things they can't take away.

Once again many thanks for your replies and may I take the opportunity to send Best Wishes to you both for a prosperous New Year.

Woggy67