NIE owners push ahead with £1bn sale to ESB
The Middle Eastern owners of Northern Ireland Electricity (NIE) parent company Viridian hope to restart a stalled £1bn sale to the Republic’s state electricity company ESB by separating the deal from their own struggling refinancing efforts.
The sale has been blocked since September — with senior and junior lenders bitterly divided on how the proceeds should be split.
But senior lenders of Viridian — previously in line for all of the money — have been asked to consider a new plan by today. If an informal poll of senior lenders looks favourable, the company will press ahead.
Viridian is owned by Bahrain-based Arcapita.
To protest from Unionist politicians, ESB announced in July that it had agreed to buy NIE, which controls Northern Ireland’s electricity transmission and distribution networks, from its owner Viridian, for £1bn. The purchase would give ESB ownership of Northern Ireland’s national grid and control of over £6bn worth of transmission and distribution assets.
Junior lenders of Viridian want a share of the proceeds — earmarked to repay some of Viridian's £1.8bn in debt — but the senior lenders insist they are first in line.
Lenders have a veto because Viridian tied the ESB deal to a complicated refinancing of some £800m it cannot repay from the sale money. It means a unanimous lender agreement is needed to get the deal done.
A spokeswoman for Viridian said the company would not comment on speculation.
But it’s understood Viridian still expects the deal to go through even if the original completion target of the end of this year has to be delayed.
Economist John Simpson said he believed the deal would still go through.
“On the face of it, it looks like Viridian has run into difficulties but it seems they have found a way round the difficulty.”
An adviser acting on the deal indicated the company had come up with an alternative two-step plan — in which the sale and refinancing will be separated out.
Viridian reckons a sale could be approved by a vote of only the most senior lenders, with junior lenders forced to accept the deal by “deemed consent” if the company can show they are not materially damaged.
Viridian has tried to sweeten the pill by creating a £200m pool to settle some junior debt. Half will be paid in by the company but half would come from the ESB purchase price. The Republic’s Competition Authority last week cleared the acquisition.
Brian Montayne, of the ESB, said: “This is another milestone for us. While there are other issues to be closed out, things are going well and we’re on course to complete the transaction by year-end.”
First Minister Peter Robinson and Enterprise Minister Arlene Foster were divided over the deal.
Mr Robinson sent a ‘hands off’ warning to Dublin over the £1bn deal, while Mrs Foster lauded the venture, praising the Republic’s semi-state provider ESB. But the Minister explained her pro-deal stance was due to commercial and departmental considerations.
The DUP and UUP sent a joint |letter to Taoiseach Brian Cowen, telling him they disapproved of ESB’s foray into Northern Ireland.