Teesside Power hits debt payment crisis

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The Independent Online

The demise of Enron has forced UK power station Teesside Power to enter talks with its creditors to restructure around £650m worth of debt.

Enron has around £500m of commitments to pay for electricity provided by the power station until 2008, but it is understood that it is having difficulty in paying.

As a result, Teesside Power is now believed to be having trouble in servicing the £650m bank debt, which was borrowed for the construction of the station. Around 30 banks lent the debt, with the lead taken by Barclays Capital.

The ownership and debt structures of Teesside Power are complicated, and Enron owns some shareholdings in parts of its operations. Therefore the banks, Enron's administrators, Teesside Power's management and its shareholders are discussing restructuring and refinancing the company. Shareholders include Midland Power, owned by US energy company GPU.

The banks could allow repayments to be delayed while the company restructures. Some parts of the management of the company are in administration along with Enron, and a restructuring could integrate these into Teesside Power. An outside operator could buy the company as Innogy, which is being bought by German utility company RWE, has expressed interest.

"We are in talks with partners and banks and the plant continues to run," said a spokesperson for Midland Power. "We are still meeting obligations and we are confident the project will continue."