Goldman bids for Drax power debt
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Your support makes all the difference.Goldman Sachs has offered to buy over a fifth of the debt of the Drax power station, topping an offer made by International Power.
The US bank yesterday bid £130m for up to 21 per cent of the senior secured debt of the financially crisis-hit Drax, a huge coal-fired plant in Yorkshire. Goldman said that although its offer came at a discount to the face value of Drax's £1.3bn debt mountain, it claimed the proposal represented a 16 per cent premium to the deal that has been put forward by International Power.
Simon Mansfield, a managing director at the bank, said: "Goldman Sachs' offer is structured to provide significant benefits to Drax's customers and stakeholders today and in the future. Our extensive experience in the energy sector and our recognised risk-management abilities will also be positive for Drax's customers and its stakeholders."
Goldman gave Drax until 22 August to accept its offer and enter into an "exclusive relationship" with the bank.
Drax is the largest power station in Britain. Last week its American owners, AES Corp, walked away from the plant after banks and bondholders refused to accept its financial restructuring offer. The plant is now under the control of independent directors who last week said they were in talks with several companies interested in taking over the power station.
"We believe the long-term prospects for the energy sector in the UK remain attractive," Goldman said.
The bank also said its offer was subject to the agreement of Drax's senior banks, senior bond holders and hedging banks by 30 September 2003.
Arlington, Virginia-based AES, has urged Drax creditors to reject an offer by International Power to pay up to £80m for a 36 per cent stake and 15 per cent of the plant's debt.
RWE-owned Innogy, which sold the coal-fired Drax plant to AES for £1.9bn in 1999, has also expressed interest in the plant. Drax faced a financial crisis late last year after it lost its most lucrative sales contract, held with insolvent utility TXU Europe.
The loss of the contract left Drax exposed to spot power prices, which have fallen sharply since the late 1990s because of increased competition. Recently, power prices have shown signs of recovery but are still way below their previous highs.
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