International Power at All-Time Low after Alert
Lea, Robert, The Evening Standard (London, England)
Byline: ROBERT LEA
SHARES in International Power plunged more than 10% to an alltime low today as it warned of "severe dislocation" in the UK electricity market and wrote down the value of its major power station bought less than two years ago.
With the group - part of the demerged former State-owned National Power - being hit by the ongoing collapse in power prices in its key US market as well, it warned earnings this year could dive by more than 40%.
IP today said it has written down the value of its 1000-megawatt Rugeley plant in in the West Midlands by u58 million against the u200 million it paid for the power station in 2001. New chief executive-David Crane denied that IP had been lulled into paying too much for the plant it bought from now-bust TXU but admitted it had not looked carefully enough at the quality of the five-year agreement, which it signed with TXU for it to take all of Rugeley's output.
"The fault is failing to properly evaluate TXU," said Crane. "But then we were not alone in that."
IP has filed claims with TXU's administrator for compensation which could run to more than u100 million but Crane declined to comment on the likely timing or the size of any payout. The Rugeley-TXU affair has also put IP into default on the u160 million it borrowed from banks to buy Rugeley. …