Coal-mining station Drax ponders flotation move

The UK’s largest coal-fired power station is poised to list on the stock market by the end of this year, it emerged today.

North-Yorkshire based Drax wants creditors to back the proposed move which would give it an enterprise value of more than £1.5bn (€2.1bn), including £908m (€1.3bn) of debt.

Drax revealed talks with creditors will take place ahead of its annual meeting in May and it would then begin restructuring its debt burden once their approval has been secured.

According to a timetable drawn up by its advisers at Dresdner Kleinwort Wasserstein, that could lead to trading in Drax shares beginning on the London Stock Exchange in December.

The listing plan can now be considered after Drax reached a settlement with the administrators of US power giant TXU Europe, whose collapse in 2002 plunged it into crisis.

The company is in line for net compensation of £333m (€479m) from TXU Europe, with the first money due by the end of next month and two more payments in 2006.

Drax, which employs more than 500 staff, said it had “come a long way” since restructuring 15 months ago and it was now a real business rather than just a debt-laden power plant.

Power sales increased to £523m (€752.8m) during 2004, from £452m (€650.6m) a year earlier, and it had improved profitability ahead of its plan, with a gross margin of £239m (€344m).

Net profit before accounting for interest payments totalled £89m (€128m) against a deficit of £73m (€105m) in 2003.

Drax, which is situated close to the Selby complex that was closed by UK Coal last year, burns 36,000 tonnes of coal every day and is a major customer for UK mines.