UK's Intl Power to discuss debt issue, eyes UK deal

LONDON, Eng. -- - British power generator International Power Plc said recently it would discuss renegotiating $900 million of debt with its lead bankers, amid concerns about its loss-making U.S. business.

"We will be having discussions with the bank group on this issue," Chief Executive Philip Cox told Reuters.

Cox added that International Power remained keen on increasing its generation capacity in Britain, where its prospects look far healthier than in the United States.

Unlike the United States, UK electricity prices have strengthened, and sources familiar with the matter said International Power was the preferred bidder for the Fiddlers Ferry and Ferrybridge power stations in Britain being sold by American Electric Power Co.

International Power has suffered from falling U.S. wholesale power prices, and the company forecast in November a second consecutive year of shrinking earnings.

Industry sources said the company might walk away from its U.S. power stations if the debt renegotiation fails.

Cox said it was too early to comment on options in the United States, but added the issue was a key one for the firm and its lead banks, who are Citigroup, Deutsche Bank, ING, Societe Generale and ABN AMRO.

"We're in pretty constant dialogue with them," said Cox, adding that one option would be to extend the maturity of the debt.

International Power was demerged from the privatised, integrated UK utility National Power four years ago with a view to creating a high-growth company. It has never paid a dividend, aiming instead to create value through capital growth, but has been dogged since its creation by weak power prices in key markets, leading its shares to fall by 50 percent since its formation.