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Drax raises £180 million for biomass conversion
DRAX Power is to raise about £180 million to enable it become a predominantly biomass-fuelled power generator.
The company intends to raise the money through a placing of up to 36,474,627 new ordinary shares.
It said the proposed placing was an integral part of the funding for the £650 million to £700 million capital investment required to transform its plant to burn biomass, such as willow and straw rather than coal.
Drax also has a £100 million loan facility agreed with the Prudential / M&G UK Companies Financing Fund and is in advanced negotiations to secure further debt facilities of about £100 million. It will also shortly launch a refinancing of its existing £310 million revolving credit facility to increase its size to about £400 million until April 2016.
Dorothy Thompson, chief executive of Drax, said: “This is a hugely exciting time for Drax and our shareholders. We now have the mandate, means and expertise to become a large renewable electricity generator. We will do this by transforming the largest coal plant in the UK into a power plant fuelled predominantly with sustainable biomass. The placing is one of the key building blocks in this transformation.
"The benefits are multiple - securing jobs at Drax and across the UK in the supply chain, providing reliable cost effective renewable power for the consumer in line with Government's policy and with our confident belief that this will deliver attractive returns for our shareholders when the transformation is complete.”