Bradley Y. Smith, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017

Dear Mr. Smith:

This responds to your letter of March 17, 1998, concerning the application of the definition of margin stock in section 221.2 of the Board's Regulation U (12 CFR Part 221) to the "Ordinary Shares of 10p each" of The Energy Group PLC, a company incorporated under the laws of England and Wales (the "U.K. company").

We understand the facts to be as follows. The U.K. company has American Depositary Shares registered on the New York Stock Exchange. The "Ordinary Shares of 10p each" are also registered on the New York Stock Exchange, although the Securities and Exchange Commission Form 20-F for the U.K. company notes that the ordinary shares are "listed, not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission."

The definition of "margin stock" in Regulation U includes "any equity security registered or having unlisted trading privileges on a national securities exchange." The U.K. company's American Depositary Shares and the "Ordinary Shares of 10p each" are therefore margin stock for purposes of Regulation U.

This is a staff opinion, as the matter has not been presented to the Board.

Yours sincerely,

(signed) Oliver Ireland

Oliver I. Ireland