Clifford Chance battles Slaughters over British Energy rescue package

Magic circle giants Clifford Chance and Slaughter and May have gone head-to-head in an effort to sort out a Government-backed rescue package for stricken electricity generator British Energy.
Clifford Chance partner David Childs, long-term adviser to the embattled energy company is leading negotiations with the Government and private financiers to secure the future of the company.
The Government has agreed to a £450m lifeline, but has made it clear that its support will not continue indefinitely. Slaughters partner Charles Randell is acting for the Government. British Energy has said this temporary respite may not be sufficient to stave off the looming threat of administration.
As the British Energy situation rumbles on, an increasing number of law firms are likely to get in on the act. Allen & Overy is heavily tipped to pick up work from the banks, while Bingham McCutchen is understood to have been instructed by the bondholders.
British Energy, the UK’s largest nuclear generator, supplies 20 per cent of the UK’s electricity. Since its privatision in 1996, the company has seen its fortunes dwindle. Increased competition has forced the price of electricity on the wholesale market down by 40 per cent in the past four years. It reported a loss of £500m last year, has debts of £460m and two £100m bonds due for repayment by the end of the year.
Although energy generators across the country are suffering from a fall in the wholesale prices they are able to charge, British Energy’s problems have been exacerbated by the fact that it has all of its eggs in one basket. Big rivals such as PowerGen and Scottish Power have retail arms, delivering power to users who pay the full price for electricity.
British Energy ended its short-lived dalliance in supplying the public when it sold the South Wales regional power company Swalec to Scottish and Southern Energy less than a year after buying it in the late 1990s.
British Energy suffers further in comparison with its peers because it is a nuclear producer. Unlike other electricity generators, nuclear stations cannot alter their output when demand is low and consequently cost-savings are hard to find.