The struggling nuclear power firm British Energy has said it is thinking of selling all or part of its Canadian subsidiary, Bruce Power.

It said it would use the money raised to repay a �650m loan from the UK government.

British Energy got the emergency loan in September after it warned it was facing insolvency.

But the assistance has proved controversial, with opponents arguing that it goes against European regulations.

Canadian interest

British Energy holds an 82% stake in Bruce Power which analysts say could be worth between �600m and �800m.

It is thought that Canadian uranium producer Cameco, which is British Energy's partner in Bruce Power, is interested in buying the holding.

"British Energy confirms that it is in discussions which may, or may not, result in the sale of all or part of its stake in Bruce Power," British Energy said in a statement on Friday.

"If there were to be a sale, the proceeds would first be applied to repay funding from the UK Government under its credit facility."

Loan controversy

British Energy operates eight plants in the UK and produces more than a fifth of the of the UK's power.

It was hit hard by a steep drop in electricity prices since the wholesale power market was reformed last year.

When the extent of the crisis at British Energy became apparent in September, the UK government granted the company an emergency loan facility of �410m.

This was then increased to �650m, with the loan due for repayment on 29 November.

But the government loan has upset competitors and environmental groups.

The environmental lobby Greenpeace is attempting to have the aid blocked in the High Court.