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Centrica seeks £2.2bn amid takeover
31.10.08
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British Gas firm Centrica said it planned to tap shareholders for £2.2 billion in order to fund the acquisition of a 25% stake in British Energy.
The fundraising move is a key step towards securing a power-sharing arrangement with EDF Energy once the French company has completed its takeover of British Energy, which has eight nuclear power stations in the UK.
Centrica also said second half operating margins in its residential business were now expected to be better than the first half, but the company gave no indication about whether this could lead to lower household energy bills.
Centrica said its latest price rise in July caused a short-term increase in customers leaving the company, but it added that account sales were running above withdrawals in recent weeks. It has 15.6 million customer accounts.
Chairman Roger Carr said the £2.2 billion rights issue would leave the company well-placed to fund the potential acquisition of a 25% stake in British Energy. Centrica remains in discussions with EDF about the proposed deal, which is likely to value the 25% stake at around £3.1 billion.
Centrica said the potential tie-up with EDF would make a significant contribution towards reducing the company's exposure to short-term commodity price fluctuations and provide it with another growth platform.
EDF has already announced its intention to build four new reactors in the UK, with the first due to be operational by the end of 2017.
The rights issue will see shareholders offered three new shares for every eight existing shares held. The impact of the proposal on the existing shareholder base meant Centrica shares fell 6% on Friday.
