Keeping the faith

30 Jul 2004 By Robert Cyran Follow @rob_cyran

The UKbased powergenerator s jv with Mitsui is buying plants on four continents from troubled Edison International. But international power generation remains an unproven strategy. Just look at IP’s problems in the US.

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International Power and Mitsui have bought a collection of power plants in Asia, Australia and Europe for $2.3bn from the US company Edison International. The joint venture between the UKbased international power generator and the Japanese group also agreed to assume $3.2bn in debt. International Power will pay $677m for 70% of the equity in the joint venture. Mitsui will pay $590m for 30%. The remaining $950m will be in nonrecourse debt.

To help fund the acquisition, International Power is launching a 33 for 100 share rights offering. The underwritten, £291m rights issue consisting of 366m shares at 82p, a 43% nominal discount to the group's current share price.

Additionally, the group has reached agreement with banks on refinancing $879m of nonrecourse debt issued by its troubled US subsidiary. International Power will pay $100m upfront, and then another $75m over the next two years. The debt's maturity will be extended from 2006 to 2010.

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