BRITISH Energy - the hard-up owner of Heysham power stations - has been thrown a £1.3 billion lifeline, reports Rachel Ryan.

In an eleventh hour deal, major creditors backed a restructuring package with the struggling nuclear power group, writing off millions of pounds in debts in exchange for a slice of the business.

The Government had threatened to put the company - the provider of one-fifth of the UK's electricity - into the hands of administrators if it failed to complete a restructuring programme by yesterday (Wednesday).

Company shares and bonds have been suspended until the paperwork is signed and sealed.

Andrew Dowler, spokesman for British Energy, says that despite the financial revamp jobs at Heysham will be safe.

"The financial restructure will not have a direct impact on Heysham power stations, but the group will be in a stronger position, which will be good for Heysham."

He adds: "There is nothing announced today which suggests cutting jobs although it would be a way of cutting costs. The only job cut programme being looked at is for head office."

The Government, which loaned British Energy £650 million last year, says it will continue to help meeting financial needs, including an annual £20 million hand-out for decommissioning.

Mike Alexander, chief executive of British Energy, says the agreement will help give the company a bright future.

The energy giant, privatised in 1996, has blamed its problems on the high cost of nuclear generation and a steep decline in wholesale electricity prices.

In June the company made a reported £4.3 billion loss.

But the deal still hinges on getting the go-ahead from the European Commission, which will decide whether the Government should give state aid to a private company.

If the green light is not given the company could face the threat of administration and re-nationalisation again.

o GREEN party councillors claim the city council has not clawed back the thousands of pounds it spent bailing out British Energy last year.

In October Cabinet agreed to allow the company to defer business rates by three months. The Greens claim this led the council to lose interest on the monies.

Cabinet member Gina Dowding says: "Giving the nuclear industry favourable treatment was unfair to other businesses in the district and British Energy should be asked to pay the council back."

But British Energy says the cash was paid back to the council last February.

The City Council refused to discuss the issue, claiming it was a private financial matter.