Bulb Energy: What comes next for the fallen energy firm?
City A.M understands the administrators of Bulb Energy (Bulb) and its parent company are targeting a sale this spring, following months of the crippled energy firm being propped up by taxpayer money.
The administrators are seemingly open to selling the parent company and supplier separately.
The supplier could also potentially be offloaded in pieces rather than as a whole entity, divvying up its 1.7m customers among multiple buyers.
Bulb was the first energy provider to enter the special administration process amid soaring wholesale price rises last winter, and the passing of the 2011 Energy Act over a decade ago.
It was the seventh-biggest energy firm in the UK, and was deemed by Ofgem to be simply too large to enter its supplier of last resort process, which had shifted over two million customers from dozens of collapsed firms to surviving energy companies.
Instead, Bulb’s millions of customers have remained at the firm which has been on life-support ever since its demise, being maintained through a £1.7bn transfusion of public money.
Following its entry into administration, Bulb and its parent company, Simple Energy, were appointed separate administrators.
Bulb’s process is being overseen by Teneo, while Interpath Advisory (Interpath) is overlooking the finances of Simple Energy.
Hedging against wholesale prices
Last week, Interpath revealed the energy firm dropped into administration partly because it was unable to hedge effectively against surging wholesale energy prices.
In documents prepared by the administrator, it was revealed Bulb had insufficient credit lines to deal with soaring gas costs, with its six-month rolling strategy overpowered by a five-fold increase in gas prices.
Interpath also revealed that both administrators have been in discussions over the potential sale of the company, where it confirmed that Bulb and Simple Energy do not need to be sold jointly.
It said: “The joint administrators of the company and the joint energy administrators of Bulb UK have had discussions with potential third-party advisers regarding instructing them to undertake a combined sales process for the shares in, or businesses and assets of, the company and Bulb UK.
“Although there are significant advantages to a combined sale approach, the joint administrators have the right to sell the assets of the company via a standalone process.”
Teneo is expected to publish its own documents on Bulb’s administration process over the coming weeks.
It is understood that there is no meaningful difference of opinion between either administrator in terms of determining Bulb’s future, with both targeting a sale by March or April.
Prior to entering administration, Bulb was offered to potential bidders while investment group Lazard also toured the market for more funds.
Rivals including Centrica, Ovo Energy and Octopus were rumoured to have looked at buying Bulb prior to its collapse in November, although they are not mentioned in Interpath’s documents.
One potential complicating factor to any sale is the secure creditor status of Sequoia Economic Infrastructure Income Fund, which is looking to claw back £55m it loaned to Simple Energy.
During the court process in November, it swooped in to block the appointment of AlixPartners as Simple Energy’s administrator, resulting in Interpath being named in its place.
Teneo, Interpath and Bulb declined to comment when approached by CityAM