Under the terms of the revised offer, IP will provide up to £130 million to Drax’s senior creditors in return for a stake of up to 38% in the equity of Drax. The intention is to finalise the detailed terms of the restructuring in order to complete the restructuring by the end of 2003. IP is offering the creditors of Drax 71p for each £1 of A tranche of debt. In July, AES, the former owner of Drax, had offered 47p for each £1 of A tranche debt, but this offer was rejected by Drax’s creditors.
Creditors have until December 2003 to decided whether or not they will sell their debt to IP.
After the restructuring, Drax will operate independently, although IP is expected to take a seat on the board. It is considered likely that Drax will continue to buy most of its coal from UK Coal for a further two years.
