DRAX creditors are locked in talks with several parties, including International Power (IP), after AES looked set to walk away from its investment in Drax, the North Yorkshire power station, last night.
Gordon Horsfield, chairman of the creditors’ committee and an independent director of Drax, ruled out administration for the power plant, which has been running at almost full capacity in recent weeks to cool the UK through the heatwave.
The creditors have extended the standstill agreement, due to expire on August 14, until September 30 and are confident of finding another backer.
AES told the 53 banks and bondholders that are creditors of Drax that it would walk away from the plant if they did not accept its restructuring proposal by midnight last night.
Ofgem, the energy regulator, was told yesterday by the independent directors that they were preparing to take executive control of the 4,000 MW plant. The regulator is understood to be satisfied with the contingency plans.
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Mr Horsfield, who recently retired from the post of director of operations at PriceWaterhouseCoopers, gave assurances last night that there would be no interruption to the power supply as a result of the handover, which would take place in an orderly fashion over the next ten days.
“Only a handful of the 480 people who work here are employed by AES. Everyone else will continue operating the plant as they have been doing for the last nine months.”
AES issued its ultimatum last week after IP made an eleventh-hour offer for the plant. IP confirmed last night that its offer to pay up to £80 million, or 55p in the pound, for a 36 per cent stake and 15 per cent of the plant’s £1.3 billion debt, was serious.
Drax is known to IP managers as it was once part of National Power, which split into Innogy and IP three years ago.