ESB raises a record €1.2bn as company grows

The ESB has raised a record €1.2 billion for investment in its business. It comes as the semi-State company will shortly declare its biggest dividend to date, up to €80 million, to the Government on foot of its 2004 results.

While the company has refused to comment on its 2004 results, to be published shortly, it is understood it will report an after-tax profit of approximately €260 million, up from €249 million the year before.

The company is growing strongly and connected 90,000 new customers last year. Britain, with 20 times the population of the Republic, only connected 155,000 new customers in the same period.

Yesterday, the company's group finance director, Bernard Byrne, said the company had secured the €1.2 billion from 18 different banks in a deal co-ordinated by Barclays Bank.

IIB Bank will manage the transaction on an ongoing basis. Among the banks participating are AIB, Bank of Ireland and Ulster Bank.

The amounts being provided by each bank were not disclosed, although seven banks are putting up €100 million each and eight are putting up €50 million each.

Three smaller banks are putting up €33.3 million each.

The company previously raised funds via a private placement in the US, but this time it decided to take advantage of favourable market conditions for bank lending.

The money will be used to upgrade the electricity network, with over €3 billion expected to be invested over the next five years. Mr Byrne said large parts of the ESB network dated from the 1940s and 1960s, and needed to be upgraded as soon as possible.

"If we don't invest, we will have system problems," he said.

The ESB network is heavily regulated by the Commission for Energy Regulation (CER), which is carrying out a review of the ESB's return on capital. Mr Byrne agreed that ESB's return on investment would be strongly influenced by the CER.

He added that some of the funding would also provide "standby financing" so that "liquidity is constantly available".

"The very positive response from the banking market is evidence of the high regard in which the company is held internationally," said Mr Byrne.

However, he said the money would not be used to shore up the ESB pension fund, which currently has a €511 million deficit.

Mr Byrne said borrowings were likely to top €2 billion at the end of this year, leaving it with an interest bill of between €110 million and €120 million a year.