Terra Firma bid goes on
The Takeover Panel told financier Guy Hands yesterday that his investment vehicle Terra Firma could not back out of a £453m bid to buy power business East Surrey Holdings.
Kellen Acquisitions, which is wholly owned by Terra Firma, had been trying to back out of an offer that it made on 8 April to buy the power company, whose key business is the Northern Ireland operator Phoenix Natural Gas.
Kellen wanted to walk away because it said Northern Ireland watchdog, the Office for the Regulation of Electricity and Gas (Ofreg), had since weakened the terms of Phoenix’s licence. Under the deal, the vehicle is prevented from passing on higher prices in the face of rising energy costs. Kellen approached the Takeover Panel with its complaints on 17 August.
The panel ruled yesterday that although there had been ongoing talks between East Surrey Holdings and the regulator not enough changes had been made to its licence to radically alter the substance of the deal. The panel said: “It has therefore ruled that Kellen may not lapse its offer for East Surrey.” Both parties accepted the decision. A spokesman for Kellen said: “We will abide by the decision and proceed with our bid plans.”
Dermot MacCann acting head of Ofreg said: “It was always our aim to protect the consumer from what is essentially a monopoly position. We are willing to discuss a 20-year extension to the 2016 deadline so the company can recover its investment.”
However, Ofreg is less keen to discuss raising its price caps. It argues that Phoenix still has room for manoeuvre, pointing to the fact that the operator raised its prices 30 per cent last October and that is still below the price caps originally set by the regulator.
