Innogy bids for Enron's UK power station

Electricity company lodges offer with administrator for plant on Teesside.
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The Independent Online

Innogy, the FTSE 100 electricity company which owns the Npower brand, wants to take control of Enron's biggest single European asset, the Teesside power station.

It has lodged a bid with Enron Europe's administrator, PricewaterhouseCoopers, for the company charged with running and maintaining the 1,875-megawatt plant.

Well-placed sources revealed that the management of the company, Enron Power Operations, has also made a bid to take it out of administration.

Like most of Enron's affairs, the ownership of the Teesside plant is highly complex, characterised by a plethora of companies owning different parts of the station and operating different contracts. But Teesside Power, in which Enron has a 42.5 per cent stake, is the ultimate owner of the plant, which is thought to be worth around £500m. Other shareholders include GPU, Utilicorp, Avon Energy Partners and Western Power Distribution.

As well as bidding to run the station, Innogy is understood to be interested in acquiring a stake in it if Enron's shareholding becomes available. The existing investors in the plant are expected to be offered first refusal, but already Western Power has stated that it is not interested in increasing its 15.4 per cent holding.

However, the value of Enron's shareholding is expected to take weeks to calculate as the collapsed energy trader raised millions of pounds in debt against its stake, mainly through the bond market.

Many bonds, secured against income, were issued in May 1999 through a specially formed company, Teesside Power Financing, registered in the Cayman Islands. Sold through lead manager Barclays Capital, the bonds were bought by wealthy individuals. It is understood that Enron raised nearly $170m (£120m) through Teesside Power Financing.

Another holding that needs untangling is Enron Teesside Operations. The company manages the power supply to the Wilton chemicals plant, home to companies like BP and DuPont. Enron bought the business from ICI in 1998 for £300m.

It also owns Wessex Water, valued at around £1bn. The sale of the utility is expected to be completed in six to eight weeks and shortlisted bidders include Italian energy group Enel, Hong Kong's Cheung Kong Infrastructure, and a consortium comprising GE Capital, Royal Bank of Scotland and Abbey National

Meanwhile, it has emerged that the Duke of Westminster has been affected by Enron's collapse. His property company, Grosvenor, owns a 50 per cent stake in Enron's head office at 40 Grosvenor Place, London SW1.

Grosvenor is understood to have appointed property agents Jones Lang LaSalle and DTZ Debenham Tie Leung to find a new tenant for the building. Enron has paid its rent for the first quarter of the year. But property industry sources said Grosvenor would suffer a short period without rental income while a new occupier was found.

The building, 50 per cent owned by Clerical Medical, was opened in 1999. In attendance at the reception was Stephen Byers, then Trade and Industry Secretary.

Enron's lease is in the hands of PricewaterhouseCoopers. It signed for the building in October 1998, but because the letting market has improved since then, Grosvenor is expected to achieve at least a 30 per cent rent rise. As a result, the admin- istrator may ask for a share in the profit.

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