§ Mr. Matthew Banks
To ask the Chancellor of the Exchequer if he will make a statement on the outcome of the Government's sale of substantially all of its shareholdings in National Power Plc and PowerGen plc.
§ Sir George Young
I am pleased to report that the Government's United Kingdom public offer and international offers of National Power and PowerGen shares were successfully completed this morning, when dealings in interim rights started on the London Stock Exchange.
As a result of bids received in the international offers, the prices of the third instalments for all investors in the UK public offer and the international offers were set at 136p per National Power interim right and 142p per PowerGen interim right.
Accordingly, the price for National Power interim rights purchased in the UK public offer was 476p per share, comprising 170p paid on successful application, 170p to be paid by 6 February 1996 and 136p to be paid by 17 September 1996.
The price for PowerGen interim rights purchased in the United Kingdom public offer was 512p per share, comprising 185p paid on successful application, 185p to be paid by 6 February 1996 and 142p to be paid by 17 September 1996.
The price for interim rights purchased in the international offer of National Power shares was 486p per share, comprising 180p paid on successful application, 170p to be paid by 6 February 1996 and 136p to be paid by 17 September 1996.
The price for interim rights purchased in the international offer of PowerGen shares was 522p per share, comprising 195p paid on successful application, 185p to be paid by 6 February 1996 and 142p to be paid by 17 September 1996.
The Government offered for sale up to 371.8 million National Power shares and 238.3 million PowerGen shares in the UK public offer and the international offers.
Some 1.1 million applications were received in the UK public offer for a total of some 367 million National Power and some 245 million PowerGen shares. This represented two times the share initially expected to be sold in the UK public offer. In response to this demand, the Government increased the total number of shares allotted to the UK public offer to 229 million National Power and 153 million PowerGen shares. At this level, the number of shares applied for in the UK public offer represented some 1.6 times the share available.
Over 98 per cent. of applicants in the UK public offer received an allocation of shares. Half of all applicants had their applications met in full.
Almost 248,000 qualifying National Power and PowerGen shareholders and more than 2,600 eligible National Power and PowerGen employees made applications in the UK public offer. All such applicants 73W received an allocation of National Power or PowerGen shares, as appropriate.
Excluding the retail tender, 108.5 million National Power shares and 56.1 million PowerGen shares were allocated to bidders in the international offers. This number does not include any shares that Kleinwort Benson Ltd. and Barclays de Zoete Wedd Securities Ltd. may have over-allotted in connection with the international offers. The extent of any such over-allotment will not be disclosed until later. As already announced, Kleinwort Benson Lid. and Barclays de Zoete Wedd Securities Ltd. may also effect stabilisation transactions.
Individual investors bidding in the UK retail tender bid for some 24 million shares in National Power and 28 million shares in PowerGen. Of these numbers, some 10 million shares and some 12 million shares, respectively, were in respect of PEP applications.
In addition to the shares sold in the UK public offer and the International Offers, Kleinwort Benson Ltd. and Barclays de Zoete Wedd Securities Ltd. as global co-ordinators for the s ale, hold an option to acquire from Her Majesty's Treasury up to a further 37.2 million National Power and 23.8 million PowerGen shares for the purpose of meeting any over-allotment made by them in connection with the relevant International Offer. This option must be exercised by 5 April 1995.
Pursuant to an agreement with HM Treasury, National Power plc purchased 98 million shares in conjunction with the offers, at a price consistent with the international offer price. Total gross proceeds from this purchase amount to some £453 million and will be received in this financial year.
Similarly, pursuant to an agreement to HM Treasury, PowerGen plc has purchased 60 million shares in conjunction with the offers, at a price consistent with the international offer price. Total gross proceeds amount to some £292 million and will be received in this financial year.
Total gross proceeds from the UK public offer, the international offers and share repurchases amount to some £3,642 million, of which some £1,782 million is expected to be received in this financial year.
Total gross proceeds may be further increased by a maximum of £305 million to the extent that, if at all, the global co-ordinator, Kleinwort Benson Ltd and Barclays de Zoete Wedd Securities Ltd. exercises its option to acquire further shares.
The costs to the Government of the National Power and PowerGen shares offers, and of the share repurchase arrangements, are estimated to be as follows:
UK Offers £ million Marketing 15.2 Share Shop Commissions 18.7 Prospectus production and distribution 0.6 Receiving Banks 3.1 Advisers' fees and expenses 7.9 Total (UK Offers) 45.6 International Offers commissions and other costs 15.1 Total (UK and Overseas Offers) 60.7
Those costs represent about 1.7 per cent. of the estimated total proceeds due from the sale of shares—excluding any shares that the global co-ordinator have an option to purchase. The costs exclude stamp duty and VAT on services provided to the Government, which are not net costs to the Exchequer. There will be some further expenditure in 1995–96 onwards in respect of instalment collection and the issue of bonus shares.
Following the offers, the purchase of shares by National Power and PowerGen and assuming the exercise in full of the option over National Power and PowerGen shares granted by Her Majesty's Treasury to Kleinwort Benson Ltd. and Barlcays de Zoete Wedd Securities Ltd., Her Majesty's Treasury expects to hold not more than 1 per cent. of the issued share capital of either company. These amounts comprise principally shares that may he needed to meet share bonus entitlements under the UK public offer.