British Energy rebels face lawsuit

BRITISH Energy's creditors are suing rebel shareholders Polygon and Brandes for damages that could run to £1.7bn. Creditors are accusing the American fund managers - who own 12.5% - of inducing the ailing nuclear generator to breach its contract with bondholders by promoting shareholder resolutions designed to tear up its planned restructuring.

The pair are pushing a plan that would see shareholders get 30% of the company rather than the 2.5% available under current plans.

The High Court filing comes as BE chairman Adrian Montague decides whether to grant an extraordinary general meeting to the pair at which the restructuring could be overturned. He has until Friday to decide.

Lawyer Andrew Wilkinson, acting for the bondholders, said: 'Shareholders attempting to prevent the company from completing these arrangements are liable for any loss which results.'

That loss is put at £1.7bn in a stinging letter sent by bondholder Deutsche Bank to Polygon over the weekend.

Deutsche calculated the amount as the difference between the bond's market price and the upside if the restructuring goes through.

Polygon refused to comment on the legal action, but its lawyers are expected to respond later today.