Drax set to complete turnaround with £1.5bn flotation

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The Independent Online

The biggest coal-fired power station in Europe, the 4,000 megawatt Drax plant in Yorkshire, is set to float on the London market with a price tag of about £1.5bn.

The biggest coal-fired power station in Europe, the 4,000 megawatt Drax plant in Yorkshire, is set to float on the London market with a price tag of about £1.5bn.

Dresdner Kleinwort Wasserstein, which has been reviewing the capital structure of Drax on behalf of its board, recommended yesterday that the banks and bondholders which own the company seek a public listing towards the end of this year.

A spokeswoman for Drax said the board would embark on a roadshow of its investors over the next two months and report back by late May on whether there was support for a flotation.

If Drax does float, it will be the culmination of a remarkable turnaround for the giant power station. AES, the American utility which bought Drax from its original owners National Power, washed its hands of the station and walked out two years ago when power prices were at rock bottom, leaving the business in the hands of its creditors.

Following the recovery in wholesale electricity prices, Drax was put up for sale last year. International Power beat off competition from Goldman Sachs and BHP Billiton with a bid valuing the group at about £800m but the creditors decided not to accept the offer.

The Drax spokeswoman said that if it did decide to go down the flotation route, then 100 per cent of the company would be sold off. However, it is not clear what level of debt will be kept in the business and how much the share offer will raise. She added that the intention was not to raise new capital but a listing for Drax would give it the currency to expand through the acquisition of other power companies.

Drax also announced yesterday that it had exceeded its financial targets last year with a profit before interest, tax, depreciation, and amortisation of £90m compared with £51m in 2003.

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