Prospective bidders are being asked to submit preliminary offers next week for the acquisition of an option to purchase equity in Eggborough--a 2 GW coal-fired plant in east Yorkshire, England.
The process is expected to take between one and two months with a bevy of more than 20 bidders--mostly hedge funds and private equity groups--interested in purchasing £134 million bonds tied to the plant that have an embedded equity purchase option.
Eggborough, which belongs to British Energy, is considered a rare asset in the U.K. market because of its size and the fact it runs on coal rather than more expensive oil or natural gas. A spokesman for British Energy did not return a call for comment nor did officials at Greenhill & Co., which is running the auction process.
Rising power prices have attracted investors to the U.K. sector over the past year. Investor interest in the sector was evident in the rising trading levels of Drax Power, another U.K. coal fired power plant, which saw its debt soar 27 points to 427 on the eve of its listing on the London Stock Exchange in December last year.
Eggborough Power Station‘s 7% bonds of 2022 soared 15 points to 335 last month (PFR, 6/19) and are within a couple points of that level now, says one trader.