Drax back from brink

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Creditors to Drax, the UK's largest power station, are preparing to take control of the Yorkshire facility in a £1bn-plus debt-for-equity swap.

Banks and bondholders have started discussions with US power company AES about restructuring the business, which was plunged into crisis by the collapse of its largest customer, TXU Europe. Drax owes around £800m to a consortium of 53 banks and £400m in bonds. Last year creditors agreed not to force the company into administration if Drax discussed restructuring plans.

Drax presented the creditors, represented by Close Brothers, with the proposals earlier this month. It is understood that AES hopes to retain a small equity stake in Drax after the debt-for-equity swap, which will be finalised before the end of May.

Garry Levesley, Drax station manager, refused to comment on details of the plans. But he said: "We have put substantial restructuring proposals to creditors and preliminary negotiations are progressing better than expected."