Herbert Smith handles first Neta deal

Herbert Smith advised Centrica on its acquisition of the rights to the output of an 860 megawatt gas-fired power station being built in Spalding, Lincolnshire. The deal marked the first time a power station had been financed under the New Electricity Trading Agreements (Neta).
Centrica has entered into an innovative tolling agreement with Intergen, which has operational responsibility for the plant. Intergen was advised by Clifford Chance. As part of the agreement, Centrica has sold its 50 per cent equity interest in the project to Intergen for £17m.
Shearman & Sterling advised Barclays Capital and Citigroup, the lead arrangers for the financing. Shearman & Sterling partner Stephen Peppiatt said that acting for the banks was very challenging because of the nature of the tolling agreement, drawn up by Herbert Smith and Clifford Chance. “This was one of the most complicated documents we have ever seen. It was a masterpiece,” he said. “I've seen tolling agreements before, but it was the first time such an agreement had been used post-Neta. If the agreement didn't work, the banks would lose their money so our challenge was to come up with a financing structure that represented everyone's interests.”
Shearmans partner Nigel Thompson was responsible for the analysis of the agreement for the banks. He said that the project was the first time that a non-recourse structure had been used for new-build power stations under Neta.
Intergen expects the power station to be fully operational by 2004. The original plans were outlined in 1996 but were held up by the Government's stricter consents policy. They were given the green light in November 2000.
The Herbert Smith team advising Centrica was led by partner Stephen Murray. The Clifford Chance team advising Intergen was led by partner Peter Blake.