Energis executives will net pounds 1m in flotation bonuses

A group of senior executives at Energis will net flotation bonuses worth more than pounds 1m when the telecoms operator comes to the stock market next month in an offering valuing the company at up to pounds 962m.

Gordon Owen, the chairman of Energis and the driving force behind its creation using the National Grid's distribution system, will receive a bonus of up to pounds 895,000, of which about pounds 600,000 will be reinvested in buying 200,000 shares in the business.

A further 15-20 executives most closely involved with the development of the business, led by finance director Chris Hibbert, will share in discretionary flotation bonuses of pounds 250,000.

Mike Grabiner, chief executive, will not receive a flotation bonus but he has been granted more than 800,000 share options which are showing a maximum paper profit of pounds 1.7m. According to the pathfinder prospectus published yesterday, his salary will be pounds 270,000 and he will be eligible for an annual bonus of up to 50 per cent of basic pay.

Mr Owen is a lifelong telecoms executive. He was finance director of Cable & Wireless when it was privatised by the previous government in 1981. He subsequently became chief executive and launched its Mercury subsidiary in competition with BT.

The shares will be priced at between 250p and 325p, giving Energis a total market value of between pounds 815m and pounds 962m. A total of 75 million shares will be issue and priced through a book building exercise. Although the issue is not being marketed at private shareholders, it is thought that between 5 and 7 per cent of the issue could end up with retail investors.

The National Grid, which owns 100 per cent of Energis, is selling off 26 per cent of the total share capital, meaning that the issue will raise net proceeds of pounds 175m to pounds 230m depending on the final share price. There is an over-allotment option which will entitle the Grid to issue a further 11.25 million bringing the proportion of the equity on offer to just under 30 per cent.

All of the proceeds will be used to repay a pounds 205m debt to the parent company and the Grid has undertaken not to sell off any more of its shares for six months after the float.

Because of the complicated way the float has been structured, the Grid will own just under 50 per cent of the ordinary voting shares but will effectively control nearly three-quarters of the company through non-voting convertible preference shares.

Advisers said this shareholder structure would give Energis operational independence from the Grid without removing its bid premium.

The company, which concentrates exclusively on the business telephone market and high value-added services, made a profit of pounds 2.1m before interest, tax, depreciation and amortisation on sales sales of pounds 69m in the first half of this year.

Energis is forecast to be making profits on a pre-tax basis in 2000-2001 and paying a dividend the year after. It has 16,000 customers spread across 35,000 sites but its two biggest customers by far are the BBC and the Grid itself, accounting for some pounds 40m of annualised sales.