TROUBLED nuclear power group British Energy is to sell its 50 per cent stake in AmerGen Energy in an effort to ease its debt crisis.

The group, which owns Hartlepool power station, will make £174m from offloading its interest in the US company to FPL Energy, a wholly- owned subsidiary of FPL Group.

British Energy is battling to broker a rescue deal with banks and bondholders before the expiry of a Government-imposed deadline of September 30.

It said it would use the proceeds of the sale to repay cash made available to the company under the terms of a £650m Department of Trade and Industry (DTI) credit facility, secured last September, which has since been extended by £200m.

The deal is one of the conditions of the proposed restructuring of the company agreed with its creditors and the DTI in February.

The East Kilbride group produces about one-fifth of the UK's electricity needs.

AmerGen owns and operates nuclear power plants in the US.

British Energy said the deal is subject to approval by the DTI in the UK and US regulators.

On Sunday, the Government warned that British Energy continues to face the serious possibility of going into administration if it is unable to agree a rescue deal with its creditors.

The DTI has refused to comment on Sunday newspaper reports that officials were drawing up detailed plans to renationalise the power generator if a deal could not be struck in the next three weeks.

But a DTI spokeswoman said ministers had always maintained that insolvency was a possibility.

British Energy has blamed its problems on the high fixed costs of nuclear generation and a steep decline in wholesale electricity prices.

In June, it announced losses of £4.3bn after slashing the value of its power plants and warned it could yet fall into insolvency.

The company has been forced to cut the book value of its eight UK nuclear plants by £3.6bn to about £800m and the Eggborough coal-fired station by £151m.