City firms advise on £1.9bn power sale

Allen & Overy, Norton Rose and Linklaters & Alliance have completed work on US power company AES' £1.9bn acquisition of the Drax power station from National Power.

A&O acted for the lead loan arrangers, The Chase Manhattan Bank, the London branch of Deutsche Bank AG, and Industrial Bank of Japan on the deal, which was completed last week.

Norton Rose acted for AES and Linklaters for National Power. Millbank Tweed acted in relation to the subordinated debt.

The A&O team was led by Stephen Gillespie and Jonathan Bevan and included partners Miles Walton, Michael Scargil and Andrew Wilson, as well as more than a dozen assistants.

Gillespie says: “This was a structured financing of enormous complexity, completed against an immovable deadline imposed by the regulator and against the backdrop of the UK government's electricity market review.”

The Drax power station in Yorkshire is the largest coal-fired station in western Europe and the flagship of National Power's domestic operation.

National Power is also selling two further plants which, together with the disposal of Drax, cuts its share of the UK market from 46 per cent to 8 per cent.

This has instantly provoked speculation from analysts that the decision to demerge the international and national arms of the company is being effected simply to create easier takeover targets.

The deal is understood to be one of the biggest this year.