Bulb, the UK’s 7th largest energy company, collapses – but government says customers are protected | Business news – To the world

Bulb, the UK’s seventh largest energy company, has officially entered administration, making it the biggest victim of the crisis in the industry to date.

The collapse was confirmed by the government after the company, which was founded in 2015 and has 1.7 million customers, announced earlier this week that it would enter into a “special administration” assumed by taxpayers.

This process is initiated because Bulb is seen as too big to be treated the same as its 20-plus smaller competitors who have been defeated since early September as soaring wholesale gas prices weigh on their finances.

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In these cases, the regulator Ofgem ensured continuity of supply by choosing a larger company to accommodate customers.

But Bulb’s special administration would back it up through guaranteed finance from the Treasury Department with no disruption to customer service or supplies while the administrators seek a restructuring agreement, sale, or transfer of their client base.

It means hundreds of millions of pounds of tax dollars will be used to fund the company’s commitments in the wholesale energy markets to ensure it can keep operating.

It has been widely reported that the special administration company, Teneo, will have access to up to £ 1.7 billion.

Bulb’s demise could endanger its 1,000 or so employees, although they are still needed in the short term to continue their functions through the special administration.

Almost four million customers have been affected by the collapse of their suppliers since autumn.

Companies were caught by record highs in wholesale gas prices, causing them to lose money on the energy they contracted to sell to households and businesses at lower prices.

Sky news revealed earlier this week that Bulb was about to hire administrators, and that it was investment bank Lazard can be set to seek a buyer for the business.

A utility executive told Sky that he expects a “substantial” interest in acquiring the company once it is cleared of hundreds of millions of pounds in debt.

Commenting on the latest development, Energy Secretary Greg Hands said, “Protecting consumers is our number one priority and the appointment of administrators will ensure that energy supplies to Bulb’s customers across the country remain normal, providing an important security while providing a lasting solution is agreed.

“The administrators will now take temporary responsibility for the operation of Bulb, which includes ensuring that customers are safely moved to another supplier when a new owner cannot be found.”

The timing of the formal appointment of administrators has been complicated by discussions with Bulb’s secured creditor, Sequoia Economic Infrastructure Income Fund, who has an outstanding £ 55 million secured loan to Bulb’s parent company, Simple Energy.

In a stock market update on Wednesday, Sequoia cited concerns about a “loan to a UK utility company that has been ‘nationalized’ (in fact) by the UK government”.

It states: “In the interests of shareholders, we will take all steps to ensure fair and equitable treatment of our secured loan in accordance with the precedents.”

Sequoia stated that during the special administration it would “not be able to enforce its collateral on the borrower’s assets” and that the funds provided by the government could be “senior” to its loan.

“Therefore, a special administration can result in the value of the fund’s collateral being transferred (without compensation) to the government,” it said.

Sky News reported just hours before Bulb entered the special administration that Sequoia had moved block the appointment of AlixPartners as administrator of Simple Energy.


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