Buy British Energy
argues Evil Knievil of www.t1ps.com

British Energy has paid for many a lunch over the past couple of years. I have been shorting it aggressively Convinced that it was going bust I regarded it as the quickest way of making money since Cherie Blair and her ghastly husband turned freeloading into an art form. But, while the liar-in-chief and the wicked witch continue will continue to carry on sponging forever, other things have changed and I am now aggressively long of British Energy to the tune of five million shares. I admit my timing was not perfect - I am only running at break-even at this stage but I am expecting to trouser it in a big way over the next six months. In putting together this bull case I am most indebted to the publication Utilities Week - a must read in every household and whose words I have cribbed liberally.

The Bail Out

British Energy runs nuclear power stations. As such it has high fixed costs and always has a potential liability for decommissioning its plants when they come to the end of their useful lives. Its problems started when a slump in electricity prices meant that it was not covering those fixed costs which exposed the fact that its borrowings were unsupportable. It was this that allowed me to profit so greatly on the short tack.

Then the Government stepped in with a "rescue" plan. Surprisingly for a body which shows an ability to waste taxpayers' cash of unmatched proportions this did not involve a huge bail out. Instead it involves the Government, bond-holders, BNFL, other creditors and an array of vastly overpaid parasites (i.e. advisors on a success only fee) reconstructing the business such that equity holders will be diluted to obliteration. This motley crew are determined that their proposed reconstruction goes ahead and the board seems happy to play ball but any such proposal must be agreed by shareholders and I think that the times they are a changin'.

If the reconstruction proceeds, existing shareholders will be diluted to 2.5% of the equity plus warrants to buy a further 5%. Since 65% of free cash flow will be diverted to the Nuclear Liabilities Fund (i.e. decommissioning), this 7.5% becomes an economic interest of just 2.6%. This is clearly not an attractive proposition and if it goes through the shares, at 7.65p may be overvalued. However, I think that even on the current reconstruction terms, 15p-25p will prove to be the eventual outturn.

In the interim results, announced in December, and again with the latest quarterlies British Energy warned shareholders that if they did not support the proposed reconstruction by approving either a scheme of arrangement or the disposal of the company, the shares would be de-listed and the reconstruction completed anyway. But if it can be shown that the company is a going concern without the reconstruction, Turkey's won't vote for Christmas and shareholders (who have to approve any deal) will block it.

The Upside from a No Vote

The disposal of British Energy's 50% interest in Amergen, netted 160 million pounds. This repaid the 94 million owed to the Government so removing its ability to force insolvency by calling in its loan. It leaves three groups of creditors to be satisfied from the remaining 66 million pounds, the 20 million pounds of other cash, any cash flow from trading since 12th December and any cash that can be released from the 359 million pounds tied up in trading collateral.

Group one are the bondholders, owed 408 million. The 2003 bonds have matured, but British Energy can probably pay the 110 million pounds owed to the holders from its cash. The 2006 and 2016 bonds may be in default even though their interest continues to be paid. They are very generously treated in the proposed reconstruction, as a result of which the bonds are trading well above par. They may have the right to put British Energy into receivership if the reconstruction is voted down, but it would not be in their interest to do so. In a liquidation, they would receive very little, whereas, if British Energy continues to trade, they will continue to receive interest and can be repaid in full on redemption.

The second group of creditors are the Banks who lent 475 million pounds to finance the purchase of the 2000 MW coal-fired Eggborough power station. They are being offered 150 million pounds in new bonds and 14% of the new shares being issued, worth some 150 million pounds at 5p each. The value of Eggborough has risen significantly in the last year. It is half the size of the Drax power station, and, like Drax, is being fitted with a Flue Gas Desulphurisation plant, due for completion this year. In December, Drax's creditors rejected an offer by International Power to buy up to 36% of its equity and 15% of its debt. Since then, the value of Drax's debt in the secondary market has continued to rise, and Drax is now valued in the market at about 1.25 billion pounds . This suggests that Eggborough is worth closer to 600 million pounds than the 300 million pounds it is valued at in the secondary debt market. If the reconstruction fails, the Eggborough banks will be significantly better off whether or not the power station is sold.

The third group of creditors are the three parties claiming 316 million pounds in relation to onerous trading contracts. Two of the contracts, accounting for half the total, were terminated in 2003, making their claims payable. The third contract, with Teeside Power, may be renegotiable. The sharp rise in electricity prices makes this contract to buy high-priced electricity no longer a financial liability, but 158 million pounds must still be found to satisfy the other two.



In the short term, British Energy would struggle to satisfy these creditors, but given time, the prospects look better. 75 million pounds was absorbed into working capital in the first half of 2003/4, which may be reversible. The Board is "exploring initiatives to reduce the demand for trading collateral," which should diminish as the forward sales run out. Halving the collateral would release 180 million pounds.

And Critically...

The strength of electricity prices means that British Energy will be highly cash-generative when it can take advantage of current prices, and only half of output for the year to 31st March 2005 has been sold forward at low prices. Implementation of the Emission Trading Scheme, due to start on January 1st, 2005, could add a further 10% to electricity prices, increasing profits and cash flow by 160 million pounds per annum. What British Energy's shareholders need is time.

Fortunately, the bureaucracy and delays of the European Union are working in our favour. The EU is not expected to reach a decision on the restructuring until the middle of 2004, delaying a shareholder vote until the Autumn. With luck, if it runs true to form the EU will take longer, postponing the vote until 2005. This gives more time for cash flow to build up and for the prospects to look more secure. It also gives larger shareholders time to prepare an alternative plan. This is necessary because British Energy is firmly committed to the restructuring. Shareholders cannot look to their Board to safeguard their interests and indeed should think about handing out P45s liberally to the top table.

While negotiating with the creditors is the short-term priority of such a plan, there are other considerations. If the reconstruction is voted down, it is quite possible that the government will force the reconstruction through by Act of Parliament, leaving shareholders with nothing. But does this sordid little Government really want to repeat its Railtrack fiasco with an election looming?

The key to this gamble - and I admit it is such - is that electricity prices are increasing which makes a big difference to cashflow. If shareholders are given time to work out an alternative plan, British Energy will still need to raise cash via a rights issue but it is not ludicrous to suggest that current investors will be left owning 65% of the company rather than 2.5%. In other words the shares would be worth 150p each and possibly rather more.

There are obvious risks. The board might steamroller shareholders into accepting a deal that is patently not in the interests of shareholders. Electricity prices might fall. Big shareholders might cave in cravenly. The EU might whizz through approval giving shareholders no time to organise. Okay, there is no risk of the EU being efficient that was my little joke. But there are risks. If I am wrong these shares could conceivably be overvalued but could even in this scenario head up towards 20p. But if I am right 150p here we come. On a risk reward basis that looks good to me.

Key Data

EPIC: BGY
NMS: 150,000
Market Cap: 47 million pounds
Market: Full
Spread: 7.6-7.7p

Article in Monday's edition of the Independent :

Rebel investors attack British Energy rescue
By Stephen Foley
26 July 2004


Rebel investors have launched a campaign to scrap the proposed 5bn rescue deal at British Energy, the nuclear power generator, which would leave shareholders owning just 2.5 per cent of the company.

Polygon Investments, a UK hedge fund owning 5.6 per cent of British Energy shares, says the restructuring is "worse than a mugging" for shareholders, and is offering to underwrite a new refinancing deal.

Polygon's proposals were initially given short shrift by British Energy, but over the weekend a big institutional shareholder - Invesco, with 6 per cent - indicated its willingness to support a refinancing and Polygon urged other investors to join its campaign.

British Energy was insisting yesterday that the rebel shareholders' plan was a non-starter. "We had to sign binding agreements with creditors last October," the company said in a statement. "We now have an obligation to implement that agreement." The company is furious at the idea that shareholders who refused to refinance the company when it fell into difficulties in 2002 are now hoping to claw back some of the value they have lost.

Under current plans, shareholders will be left with a maximum of 2.5 per cent of a refinanced British Energy, with the Government holding a majority stake and bondholders taking up to 33 per cent. Since the deal, a revival in wholesale electricity prices has improved British Energy's fortunes. As a result, the company's equity is more attractive and its bonds, which will be swapped for shares, are trading at an 80 per cent premium to their face value.

The refinancing hammered out with the Government and bondholders says that the company will be delisted from the stock market if shareholders do not approve the deal. Polygon is claiming that a stock market rule change, which comes into force this year and which requires companies to get shareholder approval before delisting, means that British Energy could not delist. If the rule change comes in time, Polygon says it will vote against the deal, but it is also hoping shareholders will put pressure on the Government to renegotiate.

One Polygon insider said: "The creditors have carried out more than a mugging, nicking this company off 230,000 private shareholders and some grown-up institutions. No alternative is a non-starter when the Government is going to end up owning 65 per cent of the company."

British Energy said: "Without an agreement in October, we would have faced administration and shareholders the likelihood of no return at all. What they are getting under the proposals is more than shareholders have got in recent similar situations."

http://news.independent.co.uk/business/news/story.jsp?story=544741

Press Release: July 25, 2004

London

BRITISH ENERGY: POTENTIAL RESTRUCTURING IN FAVOUR OF SHAREHOLDERS

SUMMARY

Polygon Investments - a UK investment firm - announces that it has 5.6% of the voting rights of British Energy (the Company) and intends to vote against the Proposed Restructuring of the Company (as defined in the British Energy press release of October 2003), provided shareholders receive a vote in any proposed delisting request of the Company.

Polygon made an approach to the Company in June of this year with a revised restructuring proposal (the Revised Proposal) that would be capable of providing additional value to current shareholders. The approach was rejected.

Polygon now intends to canvas other shareholders to seek their support.

HIGHLIGHTS OF THE POLYGON REVISED PROPOSAL

The UK Government would receive the same terms and economics as under the Proposed Restructuring

The Eggborough banks would receive a small amount of additional cash in addition to their existing entitlement under the Proposed Restructuring

Current bondholders would be paid out in full

A claw-back of value would be received from certain Power Purchase Agreement (PPA) counterparties currently treated as creditors

Shareholders would receive equity equal to approximately 30% of the new company after the injection of the necessary additional capital

Polygon is confident that the Revised Proposal would result in a major benefit to shareholders, a very high proportion of whom are retail investors who, according to company filings, number some 230,000 people who probably control more than 40% of the stock, and whose interests are not being served fairly by the existing schemes on offer.

LEGAL OBJECTIONS TO THE EXISTING RESTRUCTURING PROPOSALS

Polygon is exploring whether the Proposed Restructuring violates fundamental rights of shareholders under European Community Law. In this regard, we intend to lobby the European Union so that its approval of the state aid package is conditional on shareholders rights being respected.

Polygon is also considering whether the Proposed Restructuring amounts to expropriation without adequate compensation and is reviewing whether the UK Human Rights Act 1998 has been respected.

MEETING WITH BRITISH ENERGY

In early June, Polygon, in conjunction with its financial and legal advisors, approached the Company and its financial and legal advisors with the Revised Proposal that would be capable of delivering additional value to shareholders. Polygon was informed that the Company was not able to facilitate alternatives to the Proposed Restructuring due to legal commitments under the Creditor Restructuring Agreement (CRA). Polygon accepts the potential validity of this legal opinion.

However, since Polygons approach to the company, we have become aware that the FSA is strongly considering accelerating the implementation of certain elements of CP203 regarding delisting procedures. Polygon believes the FSA delisting rule change is the single most important factor in obtaining a more favourable outcome for British Energy shareholders. Provided that the FSA is able to affect the rule change prior to the attempted implementation of the Proposed Restructuring, the Company will have to obtain shareholder approval to proceed. Since, in our view, the Proposed Restructuring is manifestly unfair to shareholders, we would expect this to lead to its failure.

In our view, the Company would then be free to negotiate a more equitable settlement with its shareholders and creditors along the lines discussed above in the Revised Proposal.


THE EXISTING PROPOSALS AS THEY AFFECT ORDINARY SHAREHOLDERS

According to the Companys press release of October 1 2003:

If shareholders approve the Members Scheme (requiring a 75% vote), they will receive shares representing 2.5% (0.9% adjusted for the Governments 65% cash sweep) of NewCo share capital, plus warrants equivalent to 5% (1.7% adjusted).

If shareholders do not approve the Members Scheme, but pass the resolution required under the listing rules to approve the Disposal Route, then shareholders would not receive any shares but would receive warrants entitling them to subscribe for 5.0% (1.7% adjusted) of NewCos equity.

If shareholders do not vote in favour of the Members Scheme and shareholders approval in respect of the Disposal is not obtained, the Company will delist in order to complete the restructuring. Shareholders will receive no shares or warrants. In this scenario no shareholders vote at all is required.

Polygon, through its communications advisors, welcomes shareholders feedback to these proposals. Polygon intends to update the market as to its progress when appropriate.

-ENDS-

Enquiries to:

M: Communications

Media Enquiries: Tom Hampson +44(0) 20 7153 1522
+44(0) 7974 228 852
hampson@mcomgroup.com

Shareholder Enquiries: Gemma Knowles knowles@mcomgroup.com



NOTES TO EDITORS:

Background on Polygon

Polygon Investment Partners LLP (Polygon) is a global private investment firm based in London and New York. It is authorised and regulated by the Financial Services Authority. Polygon manages a multi-strategy investment fund and invests in a wide range of publicly traded securities. The firm currently has over $1.35 billion under management. www.polygoninv.com

UKLA CP203, May 2004

The UKLA made the following remarks:

7.2 In our consultation paper titled Review of the Listing Regime in October 2003 (CP203), we expressed the concern that the current regime does not provide adequate protection to minority shareholders, who may be forced to sell their shares at a price they consider to be unfairly low, or to hold unlisted securities. We therefore put forward a proposal to require shareholder approval before the cancellation of listing in order to provide adequate protection to minority shareholders.

7.7 Due to the overwhelming positive response from market participants in respect of this proposal, we have decided to accelerate the introduction of this rule ahead of the rules we will be introducing as a result of the review of the listing regime. We believe that the introduction of this requirement is important for the protection of minority shareholders who may be forced to hold securities which are fundamentally different from what they originally purchased.

7.8 We intend to follow the proposal in CP203 and introduce a requirement that, save where the UKLA otherwise agrees under rule 1.11, any issuer that wishes to cancel the listing of its shares or preference shares must obtain the prior approval of at least 75% of the total votes cast by its shareholders in a general meeting. This is in addition to the current requirements in the Listing Rules to notify a RIS and send a circular to the holders of those securities, giving at least 20 business days notice of the intended cancellation. The circular must be sent to the holders of the relevant securities at the same times as the notification to a RIS is made

Statement of Risk

Shareholders should note that there can be no guarantee that should the CRA terminate the company will be able to pursue the Revised Proposal or another proposal similar to it. It is a possibility that shareholders could end up with less than under the Proposed Restructuring if the CRA terminates.


--------------------------------------------------------------------------------
http://www.polygoninv.com/Press%20Releases.htm

The price was up again today to a high of 22-23 pence before closing around 20.75 pence. I woke up too late today so could not day trade these today. I feel the price may start to drift down from sometime tomorrow as the RSI is in a very heavy overbought postion and the price has got way above the Upper Bollinger Band (see below chart). If the price does start to drift down it will find support at 18.00-19.00 pence.

Sue - I take it that was not your 10.75m bought after the bell? ;

Nice to hear from you Chartist. There I was thinking it was yours, for a moment anyway.

Sorry Sue but I dont agree. With a Wall St recovery late on and further press
comment likely I dont see much downside from here.
10.75m after the bell is interesting too.
A lot of sellers came in this afternoon but were quickly swept up by more AT's.
Oil / energy prices jumping ever higher - at worst I guess consolidation at 20-21.
The only worry is the potential profit Poly and others are sitting on.

Re : my post yesterday, the price was down today and finished around 7.00% down to around 19.50 pence. The price is not fully inside the bollinger bands yet so the price may fall another 0.50-1.00 pence tomorrow. There is support for the price at 18.00 pence. The RSI is still in overbought territory.

Hi transco, my prediction yesterday evening was only for today. With regards to the trades that come through after the market closes :
The large trades are not dealt after hours, they are trades that took place during the day and were reported after hours.

These large deals do not happen immediately, the are dealt with bit by bit and when the overall deal is completed, then they are reported.

Because you don't know when they were executed, it is not easy to say whether they were buys or sells - judging by the day's price fluctuations. However, one thing is for sure, they will not affect tomorrow's price - they have already done that - today!

Business Telegraph 29 July 2004

British Energy shareholders need extra spark to jolt directors

Polygon plan rallies British Energy
For a business that is supposedly almost bust, shares in British Energy have shown an impressive performance recently. From a nominal tuppence ha'penny last October, they have climbed to a peak of 18.25p last night. Such stories are commonplace among penny stocks where dealing is difficult and the price prone to manipulation. British Energy, though, is not a small company. With sales of 2 billion, it is the source of a fifth of Britain's electricity, thanks to its array of nuclear power stations (hence its soubriquet here, of the company that dare not speak its name).

Last autumn, British Energy almost went under, as the price of wholesale electricity plunged to below its (fixed) cost of production. As part of the price of rescue, the Government stepped in with a stand-by loan, and the bond-holders effectively won control of the company.

Or almost. Conditions in the electricity market have changed out of all recognition since then, as prices have recovered dramatically. British Energy bonds - which are entitled to most of the equity in the reconstructed company - are now trading at a huge premium to their nominal value.

The old shareholders, who watched while their company was taken from them, still retain one potential trump card. The "rescue" needs their approval, and they are highly unlikely to give it, since if the scheme fails they would keep the company. The board could then refinance it on better terms.

Here's the rub. The directors, under chairman Adrian Montague, say they are bound to try to complete the rescue contract even though it is against the interests of shareholders today. This even extends to threatening to exploit a loophole in the Stock Exchange listing rules; if the share quotation is cancelled, the requirement for shareholder approval falls away.

This loophole is due to be closed, but it may be too late for the suffering shareholders in British Energy. At last, they are starting to organise themselves, and the rising volume of trades this week shows that all is not lost. Indeed, it would not take many more protests to oblige Mr Montague to change tack. After all, he is being paid by the shareholders to look after their best interests.

Times 29 July 2004

British Energy

BRITISH ENERGY shares have been climbing steadily on hopes that the companys restructuring can be scrapped in favour of a better deal for shareholders. Now Polygon, a hedge fund, has attacked the restructuring plan, calling it a second Railtrack that robs shareholders of their rights and hands 65 per cent of the group to the Government.

It is true that since power prices started rising at the tail end of last year the British Energy deal has looked particularly tough for shareholders, who will get just 2.5 per cent of a company that is valued at more than a 1 billion if you look at the way its bonds are trading. But without this agreement the company would have been in administration by now and shareholders would have a big fat zero.

Polygons 5.6 per cent stake has been cheaply and recently acquired. It took its stake above the notifiable 3 per cent only last week. The fund suggests that the Financial Services Authority will usher in new rules this autumn that will allow British Energy shareholders to vote on delisting the shares. But even if that happens in time, FSA insiders suggest that British Energy will be exempt.

As for the Government, it has never ruled out letting BE, the supplier of a fifth of Britains electricity, fall into administration. It would rather that happened than be seen to be bailing out shareholders. In that scenario, the chances of Polygon being around are nil. Dont be tempted by the Polygon bandwagon.

Goldman sachs have up their stake by 77 million shares since the last notice on 23rd July:

RNS Number:3487B
British Energy PLC
29 July 2004

29 July 2004



British Energy plc



UK COMPANIES ACT 1985 - SECTIONS 198-203 - British Energy plc (the "Company")



This notification relates to issued common stock of the Company ("shares") and
is given in fulfilment of the obligations imposed by sections 198 to 203 of the
Companies Act 1985 (the "Act").



The Company was notified that as at close of business on 26 July 2004, The
Goldman Sachs Group, Inc ("GS Inc") of 85 Broad Street, New York, NY 10004, USA,
was interested, by attribution only, in a total of 103,071,077 shares.



Of these 103,071,077 shares:



* The interest in 18,465,852 shares arose from the interest held by Goldman,
Sachs & Co. ("GS&Co."), a direct subsidiary of GS Inc, acting as custodian.
These shares are, or will be, registered in the name of Goldman Sachs
Securities (Nominees), Limited.



* The interest in 79,380,225 shares arose from the interest held by GS&Co,
acting as custodian of 1,058,403 American Depositary Receipts ("ADRs").
These ADRs are, or will be, held at the Depositary Trust Company of New York
("DTC").



* The interest in 5,225,000 shares arose from a beneficial interest held by
Goldman Sachs International, a direct subsidiary of GS Inc, these shares
are, or will be, registered at CREST in account CREPTEMP.

LONDON (AFX) - Uncertainty over the future of British Energy PLC intensified
today after US investment bank Goldman Sachs revealed it had bought a slug of
77.5 mln shares in the stricken nuclear electricity generator.
The purchase leaves Goldman holding 103 mln shares, or nearly 17 pct of the
total, all of which it appears to have bought in the past three weeks.
A Goldman Sachs spokesman told AFX News the shares had been bought on behalf
of a client. The investment house refused to give any other details.
A brief notification about the stake to the London Stock Exchange today
follows a weekend British press report which claimed the company was under
pressure from leading shareholders to renegotiate debt-for-equity-swap rescue
terms signed last year with creditors.
That press report said hedge fund Polygon, which last week upped its stake
to 5.6 pct, was leading a campaign to force the company to ditch the plan and
improve the terms for shareholders.
Under that government-backed plan agreed with creditors last October,
bondholders are set to take hold of 97.5 pct of the company's share capital.
The report said Polygon has also secured the backing of UK-based fund
manager Invesco Perpetual, which owns a further 6 pct stake, and is proposing
that while bondholders are paid in full, shareholders will retain a 30 pct
stake.
The hedge fund says the plan fails to recognise that wholesale electricity
prices have risen sharply since the agreement was signed, thereby boosting the
company's value.
Today, one source familiar with the situation said the US bank's client may
be trying to whip up sufficient votes to force the company to ditch its rescue
plan.
But he said the bank may equally be buying shares on behalf of creditors to
prevent Polygon from blocking the deal.
Meanwhile, a spokesman for British Energy pointed out that it has already
signed a binding agreement.
He said if it had not done that deal at that time "the company would have
faced administration and shareholders would have had the likelihood of no return
at all".
British Energy, which supplies around 20 pct of the UK electricity market,
which is worth around 15 bln stg per year, last month warned it still faces
major hurdles if it is to stave off bankruptcy a year after posting one of the
biggest losses in British corporate history.
That, despite recently announcing a return to profit.
Among those hurdles is the need for European Union approval of the rescue
plan which is being partially funded by the UK government.
At 2.05 pm British Energy shares -- which have risen by 22 pct over the past
week -- were trading 1.75 pence, or 8.3 pct down on the day at 19.25 valuing the
group at around 119 mln stg.
rob.branch@afxnews.com

Hmm, they are going to need more than 17% to block Polygon + private shareholders IMHO.

RNS Number:4671B
British Energy PLC
30 July 2004

30 July 2004
British Energy plc

NUCLEAR OUTPUT PROJECTION FOR 2004/05 FINANCIAL YEAR

Following evaluation of structural inspections carried out during the current
statutory outage at the Hartlepool power station and intensive discussions with
the Nuclear Installations Inspectorate, the company has decided that further
work to demonstrate the integrity of certain boilers is necessary. This work may
entail visual inspections of a number of boilers at Heysham 1 (one reactor is
shut down and the other is due to be shut down for its statutory outage in
August) and at Hartlepool (one reactor is currently shut down and there is no
impact on the operation of the other reactor).

The company has reviewed its annual nuclear output target previously announced
at 64.5TWh. The company believes that in the light of the new issues at
Hartlepool and Heysham 1 it is prudent to revise the nuclear output target for
the 2004/05 financial year to around 61.5TWh.

A further update on the matter will be given at the time of the company's annual
general meeting on 5th August 2004.

British Energy's Proposed Restructuring remains subject to a large number of
significant uncertainties and important conditions, including receipt by the
Secretary of State for Trade and Industry (the 'Secretary of State') of a
satisfactory notification from the European Commission that in so far as the
proposals involve the grant of State Aid by the UK Government, such aid is
compatible with the common market. The Secretary of State expects to receive
this notification by autumn 2004. Furthermore, the Secretary of State is
entitled not to proceed with the Proposed Restructuring if, in her opinion, the
Group will not be viable in all reasonably foreseeable conditions without access
to additional financing beyond that which is committed and will continue to be
available when required.

If for any reason British Energy is unable to implement the Proposed
Restructuring it may be unable to meet its financial obligations as they fall
due in which case it may have to take appropriate insolvency proceedings. If
British Energy were to commence insolvency proceedings, distributions, if any,
to unsecured creditors may represent only a small fraction of their unsecured
liabilities and it is highly unlikely that there would be any return to
shareholders. Even if the Proposed Restructuring is completed, the return, if
any, for shareholders will represent a very significant dilution of their
existing interests.

This document contains certain "forward-looking" statements as defined in
Section 21E of the US Securities Exchange Act of 1934, including statements with
respect to British Energy's business plans, the performance of its stations,
electricity prices and other matters that are not historical facts concerning
the business operations, financial condition and results of operations of
British Energy. These forward-looking statements typically contain words such as
"intends", "expects", "anticipates", "estimates", "aim", "believe", "assume",
"should" and words of similar import, which are predictions of or indicate
future events or future trends. These forward-looking statements involve known
and unknown risks, uncertainties and other factors, which are in some cases
beyond the control of British Energy and may cause actual results or performance
to differ materially from those expressed or implied from such forward-looking
statements.


Contacts:
Andrew Dowler Financial Dynamics, Media 020 7831 3113
Paul Heward British Energy 01355 262 201
Website: www.british-energy.com


This information is provided by RNS
The company news service from the London Stock Exchange
END

MSCQBLFXZDBLBBE

Cater Allen International Limited have less than a 3% stake now :

RNS Number:4777B
British Energy PLC
30 July 2004

30 July 2004

British Energy plc


Notification of Interest in Shares pursuant to Part VI of the Companies Act 1985
(as amended) from Cater Allen.

In accordance with Part VI of the Companies Act 1985 (as amended), please note
that as of 21 July 2004, Cater Allen International Limited (CAIL) no longer has
a reportable interest in the ordinary shares of British Energy Plc.



This information is provided by RNS
The company news service from the London Stock Exchange
END

HOLBRGDRDSXGGSG

Error in one of the previous RNS relating to Goldman Sachs, they have an interest in only 31 million shares and not around 103 million shares as stated in one of the RNS's during the week :


RNS Number:4775B
British Energy PLC
30 July 2004

30 July 2004

British Energy plc

UK COMPANIES ACT 1985 - SECTIONS 198-203 - British Energy plc (the "Company")

NOTICE TO BRITISH ENERGY FROM GOLDMAN SACHS GROUP INC

This notification relates to issued common stock of the Company ("shares") and
is given in fulfilment of the obligations imposed by sections 198 to 203 of the
Companies Act 1985 (the "Act").

It has come to our attention that, as a result of erroneous information provided
to us by a third party, the notification provided on 28 July for the close of
business 26 July was incorrect and that no disclosure by The Goldman Sachs
Group, Inc to you was necessary at that time.

We hereby notify you that as at close of business on 29 July 2004, The Goldman
Sachs Group, Inc ("GS Inc") of 85 Broad Street, New York, NY 10004, USA, was
interested, by attribution only, in a total of 31,078,577 shares.

Of these 31,078,577 shares:

The interest in 21,465,852 shares arose from Goldman, Sachs &: Co.
("GS&Co."), a wholly-owned direct subsidiary of GS Inc, acting as
custodian. These shares are, or will be, registered in the name of Goldman
Sachs Securities (Nominees), Limited.

The interest in 4,380,225 shares arose from GS&Co. acting as custodian of
58,403 American Depositary Receipts (" ADRs"). These ADRs are, or will be,
held at the Depositary Trust Company of New York ("DTC").

The interest in 7,500 shares is a beneficial interest by GS&Co. in 100
ADRs. These ADRs are, or will be, held at the DTC.

The interest in 5,225,000 shares is a beneficial interest held by Goldman
Sachs International, a wholly-owned indirect subsidiary of GS Inc. These
shares are, or will be, registered at CREST in account CREPTEMP.


This information is provided by RNS
The company news service from the London Stock Exchange
END
HOLBRGDRBSXGGSG



BR.Energy(BGY) Click for Fundamentals
Name Symbol Market Type ISIN Description
BR.Energy LSE:BGY London Stock Exchange Equity GB0007382939 ORD 44 28/43P





Sector Turnover (m) Profit (m) EPS - Basic PE ratio Mkt Cap (m) NMS
Electricity 1516.0 232.0 38.9 0.572 138.03 100000

LONDOn (AFX) - British Energy PLC said erroneous information provided by an
unnamed third party led to an incorrect statement being issued regarding Goldman
Sachs's holding in the company.
"It has come to our attention that, as a result of erroneous information
provided to us by a third party, the notification provided on 28 July for the
close of business July 26 was incorrect and that no disclosure by the Goldman
Sachs Group, Inc to you was necessary at that time," said British Energy.
At the close of business yesterday, the Goldman Sachs Group, Inc was
interested, by attribution only, in a total of 31,078,577 shares, as opposed to
103 mln shares as was revealed yesterday.
Yesterday, a Goldman Sachs spokesman told AFX News the shares had been
bought on behalf of a client. The investment house refused to give any other
details.

In today's Daily Telegraph Newspaper :

Brit Energy issues correction
By Tessa Thorniley (Filed: 31/07/2004)


The developing saga at British Energy took a surprise twist yesterday after Goldman Sachs, the American investment bank, was forced to retract a stock market announcement that had falsely claimed it had acquired a 15.8pc stake in the troubled nuclear power group on behalf of a mystery client.



A statement from British Energy to the City last night said: "Erroneous information provided by an unnamed third party led to an incorrect statement being issued regarding Goldman Sachs' holding in the company."

Although Goldmans declared an interest in 103m British Energy shares on Thursday, the bank has since corrected the earlier announcement and claims now to hold just 31m shares - around a 5pc stake - on behalf of unnamed clients and itself.

Previously a Goldman Sachs spokesman had said the shares had been bought on behalf of a client, but had refused to give further details.

The move is expected to prompt inquiries by the Financial Services Authority, the City watchdog. A spokesman for British Energy yesterday said he was unable to comment.

British Energy shares, which have been buoyed this week after a British hedge fund, Polygon, built up a 5.6pc stake in the company, climbed to a new high for the year, closing up 2.75p to 22.25p.

Polygon, which has teamed up with Invesco Perpetual, plans to use their 11.6pc stake to block British Energy's proposed restructuring package that would leave shareholders owning just 2.5pc of the company.

http://www.telegraph.co.uk/money/main.jhtml;sessionid=KOHST5NJPGAKVQFIQMGSM54AVCBQWJVC?xml=/money/2004/07/31/cnbrit31.xml&menuId=242&sSheet=/money/2004/07/31/ixcity.html&menuId=242&_requestid=85919

Polygon, the secretive hedge fund which is fighting for a better deal for British Energy shareholders under the company's proposed financial restructuring, will invoke European human rights legislation if the energy giant does not reconsider its plans.

Polygon's legal advisers believe that British Energy could be guilty of improper confiscation of private property if it presses ahead with a rescue package. The package would give bondholders 97.5 per cent of the company through a debt-for-equity swap.

One executive close to Polygon said: "There are a number of legal avenues open to us, and using human rights legislation is one of them."

British Energy was plunged into financial crisis in 2002 after falling wholesale energy prices left its power stations losing 5m a week.

Shares in the company, which generates a fifth of the UK's electricity, have more than doubled since May to 21.63p on hopes that the restructuring might be revised in favour of shareholders.

Polygon, which holds a 5.6 per cent stake, and Invesco, which owns 6 per cent, have proposed a revised rescue package which would hand back 30 per cent of the new company to shareholders.

As part of the deal bondholders would receive 750m.

But Adrian Montague, the chairman of British Energy, will point out at the annual meeting on Thursday that shareholder approval is not legally required for the restructuring to take place.

The British Energy board is prepared to delist the company if investors do not back the proposed financial re-engineering.

If shareholders do not give their support at a vote to take place this autumn, they will end up with nothing, Montague will say.

Analysts believe the true value of British Energy shares, post restructuring, is about 10p to 12p.

On Friday, Goldman Sachs, the US investment bank, was forced to retract a stock market statement that it had acquired a 15.8 per cent stake in British Energy on behalf of a mystery client.

It gave no explanation for the mistake, and cited "erroneous information".

The European Commission is currently reviewing whether a 5bn bailout of British Energy by the Government breached state aid rules.

It is expected to approve the deal in a formal ruling later this year.

29 July 2004: Polygon plan rallies British Energy
27 July 2004: Court challenge to Brit Energy rescue

Lots of developments this week.

AFX release today :

LONDON (AFX) - Polygon, a hedge fund which has built up a 5.6 pct stake in
British Energy PLC, is set to threaten further legal action against the nuclear
generator this week, The Independent on Sunday reported.
Citing sources close to the fund, The Independent said the hedge fund could
take British Energy to court if its management denies shareholders a better
deal.
Under the proposed restructuring, British Energy shareholders could be left
with 2.5 pct of the equity, with the rest going to bondholders and other
creditors.
Polygon intends to seek further shareholder support at the company's annual
general meeting this week.
"There are clearly legal elements to our strategy. It would be stupid not to
try to strengthen our hand at the AGM. But we want to work with management if we
can," the source was quoted by The Independent.
British Energy supplies around 20 pct of the UK electricity market, which is
worth around 15 bln stg per year. Last month the company warned it still faces
major hurdles if it is to stave off bankruptcy a year after posting one of the
biggest losses in British corporate history.
etain.lavelle@afxnews.com