Power producers share in £1.7bn payout from TXU
A payout of £1.7bn to creditors of the collapsed energy company TXU was announced yesterday, ending the uncertainty hanging over some of the country's biggest electricity producers.
A payout of £1.7bn to creditors of the collapsed energy company TXU was announced yesterday, ending the uncertainty hanging over some of the country's biggest electricity producers.
Of the total payout, about £1.4bn will go to trade creditors of TXU - mainly UK generators who had long-term agreements to sell electricity to the failed company. The remaining £300m will go to the company's banks and bondholders.
The joint administrators of TXU, Ernst & Young and KPMG, said they expected to make a first distribution of £1.3bn to creditors early next year.
The administration of TXU is one of the most complex seen in the UK in recent years involving three main holding companies and a further 200 subsidiaries.
The payouts announced yesterday will go to creditors of 25 separate TXU companies, and they range from 40p in the pound to more than 90p.
Scottish & Southern Energy is to receive £294m compared with the £340m claim it submitted, while Drax, the UK's biggest power station, said it expected to recover its full £348m claim. The privately-owned Barking Power will get £179m compared with a claim of £321m and International Power will get £84m of the £202m it claimed.
In addition to these big four trade creditors, there are a further seven companies with power purchase agreements with TXU and a lending syndicate of approximately 30 UK and international banks.
TXU ran into trouble when UK electricity prices dropped, having already sold off its own power stations and entered high-priced contracts to buy supplies from other generators. It collapsed in November 2002 after its US parent company withdrew financial support. The energy supply arm, with more than 2 million customers, was sold to Powergen for £1.3bn.
Ian Whitlock of E&Y, one of the joint administrators, said that had the creditors of TXU opted to go to the courts rather than accept a voluntary arrangement, it would have been a long and tortuous process lasting years. "This agreement gives the creditors closure and enables them to get on with running their companies. It gives them cash now rather than a very uncertain outcome in three or four years' time."
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