ESB finally seals £1.2bn deal for Viridian's NIE
Published 22/12/2010 | 05:00
STATE-owned ESB finally got its hands on Northern Ireland Electricity (NIE) after a long delayed £1.2bn (€1.42bn) acquisition closed last night.
The ESB agreed the deal to buy NIE from owner Viridian on July 6 this year but could not close the transaction until Viridian's lenders agreed to allow the sale.
The ESB financed the acquisition with some of the €2.5bn of new loans it took out in September.
People in the loans market in London said ESB was extremely lucky to get the deal done at a very competitive interest rate, just before the Irish debt crisis unfolded.
The link between the State and the ESB would have resulted in increased debt costs for the company.
The deal was delayed because Viridian's lenders were divided over how to split the proceeds of the sale.
Senior lenders believed all of the money should go to them, while junior lenders wanted some of their debt repaid for backing the deal.
Both sets of lenders had to be won over because of the way the deal was originally structured.
The conflict between classes of lenders led to a deadlock that was broken when Viridian struck on the concept of "deemed consent".
It meant junior lenders were forced to accept the plan based on an understanding that they were not "materially prejudiced" by the deal.
Following that change, the deal got the support of a majority of its 19 senior lenders, clearing the way for last night's sale.
Viridian hopes junior lenders can be reconciled to the latest twist in the process by having some of what they are owed repaid.
Senior lenders agreed to set aside £85m of the £1bn they are being repaid to fund the pay-back of junior debt. Viridian is prepared to match that from its own funds.
NIE owns the regulated electricity transmission and distribution network in Northern Ireland. Its network includes 2,100km of the high voltage transmission system and about 42,900km of the low voltage distribution system.