A new proposed bid for Drax Power by a consortium of private equity firms caused Drax's A2 and A3 bank debt to trade up nine points to 407. The U.K. power company said the £2.075 billion ($3.64 billion) bid led by Apollo Management, Texas Pacific Group Europe and TowerBrook Capital Partners, significantly undervalues the company based on the trading level of its bank debt. A spokesman for the consortium declined to comment. Drax officials did not return calls.
Drax is still in talks with the consortium as well as Constellation Energy and Perry Capital, which put in a £1.9 billion bid for the company in September. Drax rejected the previous bid on the same grounds as the most recent offer. It said the price did not equal its enterprise based on the level the debt was trading at when the offer was made. The debt traded up 10 points after the first bid was made on the expectation that other investors would make offers to the company. The £2.075 billion price tag on the most recent bid is the highest price per kilowatt that has been offered for a coal-fired power station in the U.K.
In a press release, Drax said it is asking all parties who have made, or may be considering making an approach to provide final proposals by early November. This is to ensure that "all seriously interested parties can develop firm and best offers which can be properly considered by the board and its shareholders." It added that this will allow the company to evaluate proposed bids against each other and against its proposed refinancing and listing, while giving interested parties as much time as possible to submit firm offers.