British Energy has launched legal action against Credit Suisse in an attempt to prevent former creditors in Eggborough from cashing in on their holdings in the power station.

The dispute is linked to the Government-sponsored restructuring of British Energy, after the collapse of power prices in 2002.

Creditors in Eggborough, British Energy’s only coal-fired power station, swapped their debt claims for £134 million of bonds and the option of buying the 1,960-megawatt plant outright in 2010.

For five years the bondholders have been seeking an opportunity to realise the value of the bonds before the 2010 deadline.

In January it emerged that a group of leading bondholders had agreed to create Ampere, a company that will be able to exercise an option to buy the plant from British Energy in 2010 and pay bondholders a cash dividend.

The bonds were trading then at more than three times their face value in the secondary market, boosted by resurgent power prices.

It is thought that the deal, which was financed by Credit Suisse, would see bondholders share a £238 million cash payout.

However, British Energy, which also owns eight nuclear plants, claims that the original refinancing deal barred the banks from transferring the bonds to other entities.

It alleged today that Credit Suisse’s attempts to transfer its interest into Ampere “are not permitted under the Eggborough finance agreements”.

It added in a statement: “British Energy does not consider the transactions in question to be in the best interests of British Energy and its shareholders. The current proceedings against Credit Suisse seek a declaration that the proposed transactions are unlawful."

Company insiders said that British Energy is concerned about becoming "one step removed" from the original holders of the Eggborough bonds.

"British Energy has not seen the agreement between Ampere and the bondholders and is concerned," one source said. "Just because the market changes, it does not change a legally binding contract."

At a court hearing on March 19 Mr Justice Field made an order to join Ampere to the action.

A trial is expected to take place on May 21 at the High Court, British Energy said.

British Energy Group added in its full-year trading update that its nuclear output for the full year was marginally ahead of expectations, despite the shutdown of its Hinkley Point B and Hunterston B nuclear power stations.

The company produced 58.4 terrawatt hours of electricity in the 12 months to March 31.

Nuclear output accounted for 51.2TWh, slightly ahead of analyst estimates of 49.4TWh. Coal-fired output was 7.2TWh.

Hinkley Point B and Hunterston B are expected to be back in operation by the end of the month.

Share in British Energy gained 20p, or 4.1 per cent, at 508p in morning deals.

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