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Last Updated: Sunday, 31 August, 2003, 09:42 GMT 10:42 UK
UK firm wins Drax power struggle
Drax was cast loose by its owners in early August
International Power has started exclusive talks to take control of Drax, Britain's biggest power station, after beating off three other bidders.

Drax's creditors opted to support International Power, after the UK power generator revised its bid on Friday.

The agreement sees off offers from US investment bank Goldman Sachs, mining firm BHP Billiton and investment firm Miller, McConville, Christen, Hutchison & Waffel (MMC).

Drax has been trying to restructure its finances since last year, when it was pitched into financial crisis by the collapse of TXU Europe, its biggest customer.

AES, the US utility that owned Drax, effectively abandoned the plant at the beginning of August after banks refused to accept its financial restructuring offer.

Quick thinking

The key for International Power's rapid victory in the four-way race for Drax was paying a higher price for some of the plant's debt.

The overall size of its bid, however, remains a maximum 130m ($205m), and the deal will give International Power a stake of up to 38% in Drax.

The speedy provisional resolution of the Drax sale has taken many observers by surprise.

MMC, for example, only entered the race on Friday.

And it had seemed that the offers on the table were so complex - involving various mixes of shares and debt, and differing proposals for the future of the plant - that it could take a long time to secure agreement.

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