SSE has confirmed it is in discussions with the designated board members for the new energy retail company, which was expected to be created with the now scrapped merger between SSE Energy Services and Npower.
The merger will no longer go ahead after news emerged this morning (17 December) that the two companies were unable to agree on adjustments of the terms for the planned transaction.
Katie Bickerstaffe was named as chief executive designate for the new company back in April and took up the role on 24 September.
“Appropriate arrangements” were agreed at the time of her appointment to compensate her in the event of the transaction not going ahead.
Under the terms of her appointment, she was due to receive a basic annual salary of £650,000, as well as health insurance for her and her spouse and dependent children and a car allowance of £15,000 per annum.
She was also expected to receive a cash allowance in lieu of a pension contribution equal to 20 per cent of her basic salary.
Bickerstaffe was also eligible to participate in short and long-term incentive arrangements in connection with her employment.
Other people appointed to the board for the new company included Gordon Boyd as designate chief financial officer and Dr Martin Read as designate chair.
SSE said it is currently in discussions with the designated board members for the new company about “their future options”.
Bickerstaffe’s and Boyd’s costs were “spilt proportionately between SSE and Innogy according to their respective percentage share in the proposed company,” Utility Week understands.
SSE’s chairman Richard Gillingwater urged shareholders to vote through its deal to merge with fellow big six energy supplier Npower in a shareholder circular about the proposed deal published on 27 June.
In the document he said the move had “strong strategic logic”. He outlined that a “standalone household energy and services business will benefit from its own dedicated board of directors and specialist management team, supported by skilled employees and focused entirely on strategic and operational developments in the energy retail sector, including the competitive and regulatory environment.”
Shareholders subsequently voted in favour of the proposed merger after a general meeting in Perth, Scotland on 19 July.
The circular outlined that Bickerstaffe’s employment would be “terminable by either party” on not less than 12 months’ notice.
The new company was planned to “create a new market model”, combining the “resources and experience of two established players with the focus and agility of an independent supplier,” according to the circular issued in June.
Shareholders were asked to approve:
- the declaration of a special dividend (in kind in the form of shares in the new company) to give effect to the demerger; and
- the waiver of the obligation on Innogy, which owns Npower Group Limited, to make a general offer for all of the issued shares in the new company on completion (under Rule 9.1 of the City Code on Takeovers and Mergers).
Following the vote, Gillingwater said: “I am very pleased that SSE’s shareholder have passed the two resolutions relating to the planned SSE Energy Services transaction, any by such an overwhelming margin.”
The news was also welcomed by the parent company of Npower, Innogy who described it as a “crucial step” on the journey to create a new British company that would “better serve customer needs in the rapidly changing energy market.”
SSE shareholders were expected to retain their existing SSE shares and hold one share in the new company for every existing SSE plc share they held at the demerger record time.
The new company would have been owned up to 65.58 per cent by SSE shareholders, while Innogy was going to hold 34.42 per cent of the shares in the new company on completion.
Completion of the transaction and the listing of the new retail energy company was expected to occur in the last quarter of 2018 or the first quarter of 2019.
The deal received final clearance from the Competition and Markets Authority in October. Last month, SSE and Innogy revealed they had entered into negotiations on adjusting the terms of the planned transaction as agreed in November 2017.