PRIVATE investors have been left out in the cold in British Energy’s restructuring, with just 2.5 per cent of the new company’s shares allotted to existing equity investors.

Shareholders, who have seen the value of their investments fall from a peak of 730p in 1999 to about 5p this week, have condemned the debt-for-equity swap as “scandalous” and a “shady deal”, cooked up between the Government, banks and bondholders.

However the deal for shareholders compares favourably with other recent restructurings.

Marconi’s shareholders received 0.5 per cent of the company; Telewest’s received 1.5 per cent; and NTL’s shareholders were left with nothing.

British Energy’s bombed-out shares, once on the FTSE 100 index of the UK’s biggest companies, edged up slightly to close at 5.38p last night, having closed on Tuesday at 5.35p. That puts a £33 million value on the company, which was worth £5 billion at its peak.

British Energy is the latest formerly state-owned company to run into problems after privatisation.

Private shareholders last night accused Patricia Hewitt, the Secretary of State for Trade and Industry, of turning her back on them in order to avoid the political embarrassment of Railtrack-style debacle.

“They should have renationalised the company and paid us compensation at a fair rate, as they were forced to with Railtrack,” Malcolm Stacey, a private shareholder who invested £55,000 in British Energy shares over the past four years, said.

“The Government ruined British Energy and they know they did. They abolished the electricity pool to get votes and British Energy suddenly found that it cost more to produce electricity than it could get from the customer,” Mr Stacey said.

British Energy revealed last year that it needed Government help, after a collapse in the price of wholesale electricity pushed the company to the brink.

The Government supplied the company with a £650 million rescue loan, and insisted on a restructuring package which would see shareholders take most of the pain as bondholders and banks — which are owed about £1.3 billion — are given the lion’s share of the company.

Shareholders have yet to vote on the restructuring plans and will not be able to do so until European Commission approval of the government-backed rescue package is given, some time next year.

However, the restructuring agreement incentivises shareholders to vote in favour. Shareholders will receive both shares and warrants if they vote for the proposal, but stand to get nothing if they vote against it.