Calpine sells last UK power plant

European power prices had fallen amid over capacity and supply

US electricity firm Calpine is selling its last UK power plant to a group led by International Power (IP) as it tries to cut $18bn (£9.9bn) of debts.

Based near Hull in north-east England, the Saltend plant is one of the UK's most-modern and will sell for £500m.

UK company IP and its Japanese partner Mitsui & Co want to tap into Europe's recovering power market, where prices have risen by 50% over the past year.

IP will own 70% of the Saltend plant, with Mitsui taking the remaining 30%.

The majority stake will cost IP £150m. Mitsui will put in £65m, and a consortium of banks will supply the remaining money.

Immediate effect

"Saltend is a modern, efficient plant, and will be earnings enhancing in the first full year of ownership and immediately cash generative," IP chief executive Philip Cox said.

Calpine, which has power plants across the US, has been trying to offload non-core assets and reschedule its debt repayments.

The company has been looking to cut its debts since it was caught in a credit crunch following the collapse of energy-trading company Enron in 2001.

For Mitsui, the Saltend plant gives it increased overseas power generation at a time when Japan's economy is sputtering.

This is not the first time that IP and Mitsui have joined forces to buy power assets and the two companies last year paid $2.2bn for 13 electricity plants from Edison of the US.