UK independent electricity generator, International Power today confirmed that it had agreed to buy the 1000 MW coal-fired Rugeley power station from TXU Europe for à‚£200 million ($277 million). As part of the deal, TXU will contract to provide coal and purchase the plant’s output through to the end of 2005.
The purchase, which had been widely expected, forms part of International Power’s strategy of growing power generation assets in its core US, UK and Australian markets. It will add a further 1000 MW of capacity in Britain to the 500 MW already available from the Deeside combined cycle gas turbine plant.
International Power expects the midlands acquisition to meet its investment criteria and to be earnings accretive and cash generative in the first year of operation.
“We are pleased to acquire this efficient coal facility, which will give us a reliable medium-term earnings contribution under the tolling agreement”, said Peter Giller, CEO of International Power. “Rugeley gives balance to our existing single asset position in the UK electric generation sector”, he added.
TXU Europe is part of an US-based energy company which has $25 million of annual revenues and $43 million of assets. It operates in the fields of electric and natural gas services, electricity generation, merchant trading, energy marketing, energy delivery, telecommunications and other energy-related services.
TXU has been expanding in the UK and continental Europe and last year acquired Norweb Energi in the UK and Stadtwerke Kiel in Germany. The sale of Rugeley will provide resources for further growth. TXUsaid the disposal would help to strengthen its balance sheet to allow it to further expand its European operations.
“The sale brings our disposal programme to over à¯¿½800m over the last 12 months,” said Martin Stanley, president of TXU Europe Energy Trading.
A third of the payment will be made on completion of the transaction at the end of this month, with the balance settled within six months. Both companies said no cuts would be made from the station’s 120 staff.
TXU Europe will operate six UK merchant generating facilities in the UK following the sale, with total available output of 5688 MW.