Collapse of Britain’s seventh-biggest energy firm Bulb confirmed – leaving taxpayers to take the strain
Bulb, Britain’s seventh biggest energy supplier, has formally entered into administration – becoming the biggest victim so far of the crisis in the industry.
The collapse – confirmed by the government on Wednesday night – comes after the company, which was launched in 2015 and has 1.7 million customers, confirmed earlier this week that it was set to enter a “special administration” underwritten by taxpayers.
That process is being adopted because Bulb is regarded as too big to be handled in the same way as the more than 20 smaller rivals that have already succumbed since the start of September as surging wholesale gas prices put their finances under strain.
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In those cases, regulator Ofgem ensured continuity of supply by choosing a larger firm to take on customers.
But the special administration for Bulb would see it propped up by guaranteed funding from the Treasury, with no interruption of service or supply to customers, while administrators seek a restructuring deal, sale or transfer of its customer base.
It will mean hundreds of millions of pounds of taxpayers’ money being used to fund the company’s obligations in the wholesale energy markets to ensure that it can continue operating.
The company’s demise may place its workforce of roughly 1,000 at risk though in the short term they will still be needed to carry on in their roles through the special administration.
It takes to nearly four million the number of customers who have been affected by the collapses of their suppliers since the autumn.
The companies found themselves caught out after a surge in wholesale gas prices to record levels left them losing money on the energy they were contracted to sell to households and businesses at lower prices.
Sky News revealed earlier this week that Bulb was on the brink of calling in administrators and that investment bank Lazard was set to be hired to seek a buyer for the business.
An executive at one energy supplier told Sky they anticipated “significant” interest in acquiring the business once it has been unshackled from hundreds of millions of pounds of financial liabilities.
The timing of the formal appointment of administrators has been complicated by talks with Bulb’s secured creditor, Sequoia Economic Infrastructure Income Fund, which has an outstanding £55m secured loan to Bulb’s parent company, Simple Energy.
In a stock market update on Wednesday, Sequoia referred to its concerns over a “loan to a UK energy supply company which has been (in effect) ‘nationalised’ by the UK government”.
It said: “In the interests of shareholders, we will be taking all steps to ensure a fair and equitable treatment for our secured loan, in accordance with precedents.”
Sequoia noted that during special administration that it would be “unable to enforce its security over the assets of the borrower” and that funding provided by the government “may rank senior” to its loan.
“Therefore, special administration may have the effect of transferring (without compensation) the value of the fund’s collateral to the government,” it said.
Business
‘Knock-back for London’ as AstraZeneca sells shares directly on rival New York Stock Exchange
One of the UK’s most valuable listed companies is to sell its shares directly on the rival New York Stock Exchange, in a move described as a “knock back for London”.
While AstraZeneca will maintain its headquarters in the UK and its primary stock listing on the London Stock Exchange, the news can be seen as a move away from London.
“Although there has been no suggestion that AstraZeneca is imminently going to up sticks and move its primary listing from London, there may be some nervousness this morning around the risk that the UK market might lose one of its largest constituents,” said Russ Mould, the investment director of investment platform AJ Bell.
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AstraZeneca exit is a frightening prospect for the City and the government
The news “does at least hint at the possibility of a more dramatic shift at some point in the future”, Mr Mould said.
There may also be relief that AstraZeneca is not moving from the London Stock Exchange altogether.
“I think there is probably relief that it’s not pursuing a primary listing in New York, but the decision is hardly a ringing endorsement of London,” said Neil Wilson, the UK investor strategist at investment platform Saxo Markets.
“It reflects the fundamental, structural issues in the UK for the largest globally-oriented stocks – the depth and liquidity of its capital markets is falling short of what’s on offer across the pond.”
“It’s also a bit of a knock-back for London”, Mr Wilson said.
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The Cambridge-based pharmaceutical company said the decision to sell shares directly on the New York Stock Exchange – rather than the previous less straightforward system of using American depository receipts – has been made to allow it “to reach a broader mix of global investors” and “make it even more attractive for all our shareholders”.
“The US has the world’s largest and most liquid public markets by capitalisation, and the largest pool of innovative biopharma companies and investors,” the company said in an announcement to investors.
AstraZeneca’s share price was up 0.7% on the news.
Jaguar Land Rover (JLR) has announced it will partially resume manufacturing “in the coming days” after nearly a month in the wake of a cyber attack.
The luxury car-making plants have paused production since 31 August. The cyber attack halted car-making across the supply chain, with staff off work as a result.
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More than 33,000 people work directly for JLR in the UK, many of whom are on assembly lines in the West Midlands, with the largest facility located in Solihull, and a plant in Halewood on Merseyside.
Roughly 200,000 more are employed by several hundred companies in the supply chain, who rely on JLR orders as their biggest client.
“As the controlled, phased restart of our operations continues, we are taking further steps towards our recovery and the return to manufacture of our world-class vehicles,” a company spokesperson said.
The shutdown was said to last until at least 1 October.
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“Today we are informing colleagues, retailers and suppliers that some sections of our manufacturing operations will resume in the coming days,” the company added, days on from the partial restart of its IT systems, which allowed supplier payments to recommence.
“We know there is much more to do, but the foundational work of our recovery is firmly underway, and we will continue to provide updates as we progress.”
Over the weekend, the government said it would underwrite a £1.5bn five-year loan guarantee to JLR.
The promise came as the head of the influential Business and Trade Committee of MPs wrote to Chancellor Rachel Reeves, warning small firms reliant on JLR, “may have at best a week of cashflow left to support themselves” with “urgent” action needed to support businesses.
JLR was just the latest business to be the subject of a cyberattack.
Harrods, the Co-Op, and Marks and Spencer, are among the companies that’ve struggled in the past year with such attacks.
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