In response to a request for clarification of the statement made in post 2030 it was my understanding that the restructuring package required certain actions from shareholders and bondholders as their part of the restructuring. In addition HMG agreed to make certain payments to the decommissioning fund for the next 10 years (at least) and other undertakings of a financial nature.
Therefore, if the restructuring package is approved by all then the government will need to make the payments proposed as part of its end of the deal. As this will effectively be on going state aid to a private company this will mean that the restructuring will need EU approval as the current aid package only has EU approval until early March.
Therefore, unless I have read it wrong, there is no aid package waiting to be picked up!!
With regards a recovery in the stock there needs to be a restructuring to a profitable business as one poster pointed out above. With power prices at current levels this restructuring will NOT make BGY profitable at the operating level and therefore something else will need to be done.
The part of all this that currently puzzles me is that the restructuring cannot work in the long term UNLESS the company is profitable. Therefore, HMG should have found some means in the restructuring package to give BGY a better price for its power.
It may be that to do this requires legislation and (obviously) a revamp of NETA to make this happen. While HMG have stated that "NETA is not perfect" and needs to be looked at it has stopped short of any indication that a revamped NETA will provide better prices for nuclear output.
This may be because the government does not want to pre-empt the Energy white paper and lay itself open to critisism that the Energy white paper is a revamp to the electricity industry to keep the nuclear liabilities off the government's books.
I believe that in the end that is exactly what it will be, a white paper designed largely to keep nuclear profitable in the private sector. Who will pay? Well - it will be the consumer of course with another back door tax by creating a much needed rise in the wholesale price for nuclear output.
However, I feel that this may well be a double edged sword. In return for a gauranteed minimum price there may also be a ceiling price with nuclear almost removed from the serious market swings experienced by other generators.
This would give BGY the price hedge it needs, but in payment for reduced risks there will obviously be reduced returns.
There are two major problems though. The Bondholders have to use their crystal balls to work out what the government will do in the energy white paper and make their decision before the government does. If the government does take BGY back into private hands you can rest assured that the market mechanism will ensure that BGY is profitable and the government will have lost nothing and get electricity consumers to foot all the bill and more over time.
The fact that the bondholders cannot see all the cards is their main worry because once they convert to shareholders they are in the same boat as the rest of us.
The basic question to bondholders is "trust us - we are the government" - after what has gone before thats a big ask in my opinion.
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