International Power's £190 million non-recourse financing currently out in the market breaks away from the standard profile of UK power deals. The unique characteristics of the Rugeley power plant have given rise to a mini-perm, a short-term loan, typically not repaid through project revenues alone. Instead project sponsors are obliged to refinance in order to amortize the facility.
Mini-perms are not a common feature of UK power deals to date but Rugeley may not be a one-off. Uncertain conditions created by the introduction of NETA (New Electricity Trading Arrangements) and a subsequent shift towards trading rather than long-term power purchase agreements suggest that short-term financings may be coming into fashion.
International Power acquired the 1000MW coal-fired power plant from TXU in June 2001. ING Bank and TD Securities scooped the mandate to take the purchase off balance sheet. This is now underway, with debt being raised through special purpose vehicle, Rugeley Power Ltd. The facility breaks down into a £160 million 7-year term loan, a £20 million 7-year letter of credit and a £10 million working capital facility. Although they have fully underwritten the amount themselves, ING and TD secured a further two lead arrangers prior to general syndication, Bank of Tokyo-Mitsubishi and Credit Lyonnais....
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