AES Drax Holdings receives revised offer from International Power

By Carlise Newman

Chicago, Aug. 20 - AES Drax Holdings Ltd. said it has received a revised offer from International Power plc that rivals the offer from Goldman Sachs.

The International Power offer will provide up £100 million to fund the cash out option and proposes that the discount price for senior creditors' participation in the A-2 debt will be 65% of the principal amount.

International Power will leave the company and senior creditors to decide whether to use £30 million of cash currently held by the company or up to £50 million pounds in order to fund the A cash-out option.

If the company and the senior creditors elect to use the £30 million, the A cash-out option will be funded through up to £30 million of project funds with a proportional contribution from International Power's £100 million and then using International Power's £100 million for any additional amounts required.

International Power's offer increases the margin on the A-2 debt to 400 basis points. In addition, the offer changes the terms and ranks the A-3 debt behind the A-2 debt but ahead of the B debt, both for the cash flow waterfall and for security over Drax's principal Drax. The A-3 debt will rank fourth and pay interest at Libor plus 500 basis points, with the potential of having interest deferred if no funds are available under the cash flow waterfall.

The B debt will pay interest at Libor plus 200 basis points with the potential of having interest deferred if no funds are available under the cash flow waterfall.

The offer includes a cash-out option on the B debt to senior creditors at 55% of the principal value if they accept the A cash-out option. International Power will provide up to £30 million to support its commitment regarding the B cash out option.

Goldman Sachs previously offered to buy up to 21% of the senior secured debt of power station AES Drax for £130 million. At the time, the offer represented a 16% premium over a rival bid from International Power, which had offered to pay up to £80 million for 15% of the plant's £1.3 billion debt.

Goldman's offer will expire Aug. 22.

In early August, AES Corp. pulled out of the AES Drax restructuring process. The move came after AES Drax's senior creditors refused to immediately reject International Power's bid as AES had demanded.

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