18 October 2002 – German utility company E.ON confirmed on Thursday that is was arranging a credit facility of up to €15bn ($14.6bn) with a banking syndicate but denied that the loan was to be used for further overseas acquisitions.
The suggestion of a loan was first reported on 4 October as a facility to refinance existing debt and to provide liquidity following recent acquisitions.
E.ON is still awaiting final court approval for its €10bn purchase of Ruhrgas after obtaining the agreement of the German government, In July the acquisition of Britain’s Powergen was closed.
E.ON Chief Executive Ulrich Hartmann has said he would like to make a major acquisition in the United States by the end of the year, a move analysts say could cost as much as €bn10.
Speaking about the loan facility, E.ON said, “This measure serves as a liquidity provision and is not intended to be used for any major borrowing at present.”
Outside the United States, one possible target for E.ON is TXU Europe, which is due to sell some or all of its business after its US parent TXU Corp cut it adrift by severing links between its borrowings and those of TXU Europe.
TXU Europe would be a good fit with Powergen because of TXU’s British power business that supplies 5.5 million customers in eastern and northwestern England.
E.ON said it had mandated Barclays Capital, Deutsche Bank and JP Morgan as bookrunners for its loan.
Citigroup, Dresdner Bank and HSBC have also been asked to participate in sourcing the loan in the syndicated market. Syndication will start in November, it said.