Wednesday 17 January 2018

Workers halve ESB's value with €94m stake price

Paul Melia and Donal O'Donovan

ESB workers value their 5pc stake in the semi-state at €94m, half what the government thinks it is worth, the Irish Independent has learned.

On Saturday the Irish Independent revealed that the Government has ordered the ESB to raise €400m by selling some of its 13 power stations.

Now new figures show that trading in ESB shares held by around 10,000 workers and pensioners through an employee share participation programme (ESOP) has cast serious doubts on the value of the business.

Employees were prepared to pay just €1 a share when the first market for trading in shares was held last month.

That values their 5pc stake in the ESB at €94m, implying an overall value of just €1.88bn on the company.

It compares with a value of just over €4bn put on the company in a report prepared for government last year on the sale of state assets.

However, a spokeswoman for the ESB said the price paid does not reflect the true value of the company, if it were to be sold on an open market.

"The market day event was for trading by stock holders with limited rights," she said.

The price achieved for the ESB stock should not be regarded as the full value of the company, she said.

ESB staff and pensioners have held the 5pc stake since 1996 but were not allowed to cash in the shares until last month when the first market day for the stock was organised.

Successful

Shares could be traded between holders for the first time, so ESOP members decided for themselves the price at which they bought or sold stock.

The results of the sales, which were run by PriceWaterhouseCoopers (PWC), showed that shares were sold for €1 each.

A briefing note prepared for ESOP members shows that workers who offered shares for €1 each sold most of their holdings.

"PricewaterhouseCoopers (PwC), the Internal Market Administrator, has advised the (ESOP) Trustee that the weighted average successful bid price was €1.00 per share (the Market Price) and this is the price that will be paid to all successful sellers," it said.

"Please note that participants who offered shares at a minimum price of €1.00 were successful in selling approximately 82pc of the shares they offered for sale."

The decision by workers to only pay €1 per share is significant because the €4bn value put on the company is based on a much higher net asset value.

The ESB, and its potential financial worth, is under the spotlight after the Government last week ordered the board of the company to raise €400m for the State by selling some of its power stations.

The ESB made profits of more the €230m in the first six months of this year.

It owns 13 major power stations at home and abroad, including Moneypoint, Coolkeeragh, Dublin Bay Power, Aghada, Poolbeg, Corby in the UK and Amorebieta in Spain.

Irish Independent

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