Bulb Energy Ltd

Bulb Energy Ltd (the “Company“), the first energy company to be placed into special administration in November 2021, is being acquired by its former rival, Octopus Energy Group.

The Company supplied energy to approximately 1.5 million domestic customers and 14,000 non-domestic customers. It experienced a sharp increase in net losses and deterioration in cash flow due to increases in the price of wholesale gas and electricity from May 2021, which meant the Company was required to trade at a loss in order to maintain a continuity of supply to its customers.

In early 2021, the Company started a fundraising process primarily to expand the business. As the commodity markets deteriorated, the process evolved into seeking an equity raise, sale of the business and/or transfer of customers to another energy supply company.

Discussions held with a number of parties during the course of 2021 did not result in a transaction and, in November 2021, the Company’s directors concluded that the Company had no prospect of avoiding an insolvent administration.

On their appointment, Matthew Cowlishaw, Matthew Smith and Daniel Butters of Teneo, the Company’s Joint Energy Administrators, entered into a funding agreement with the BEIS Secretary. This Government bailout ultimately meant that the costs of supplying energy to Bulb’s customers were transferred to the taxpayer.

The Joint Energy Administrators also took actions to stabilise the operations of the Company, including by contacting key suppliers to ensure the continuance of supply, revising collateral agreements with key industry parties and negotiating a Transitional Services Agreement between the Company and the Administrators of its parent company, Simple Energy Limited (“Simple“).

The Joint Energy Administrators, together with the Administrators of Simple, also jointly appointed Lazard to pursue a joint sale of the operations of the Group. The formal sales process commenced in February 2022. It involved a number of interested parties which undertook detailed due diligence during the second phase of the sales process.

Ultimately, a deal was reached with Octopus Energy Group, which announced that it had agreed to take on Bulb’s 1.5 million customers, “bringing an end to taxpayer losses and uncertainty for Bulb customers and employees.”

According to its press release, Octopus is paying the government to take on Bulb’s customer base – it is believed that this will represent a higher amount per customer than suppliers typically paid to take on any of the 29 suppliers who have failed since September 2021. Taxpayers will also benefit from a profit share agreement for a period of up to four years.

The transfer is conditional upon approval of the BEIS Secretary and will like take effect in mid-November 2022. However, since Bulb is currently unhedged, the Government (and accordingly the taxpayers) will provide financial support to the purchasing entity over the course of winter 2022. This financial support will be repaid by the entity in accordance with an agreed repayment plan schedule.

Solicitors from Linklaters assisted the Joint Energy Administrators.

The Joint Energy Administrators’ Proposals can be found HERE, their Progress Report can be found HERE, and Octopus’s press release announcing the sale can be found HERE.