Drax wins £180m windfall

The North Yorkshire power station has reached an agreement with Her Majesty’s Revenue and Customs on Drax’s Eurobond financing structure.

As a result, £117m of cash ring fenced on the balance sheet will now be released.

Further tax losses worth £63m have been agreed, and these will be offset against tax charges over the coming years.

Tony Quinlan, finance director of Drax, said: “If we receive appropriate regulatory support, this cash will form an integral part of the capital required to deliver our biomass strategy, which in turn will provide the UK with cost effective, reliable and flexible renewable electricity.

“We are delighted to have brought these complex matters to a conclusion. We would like to thank HMRC for their professionalism and commitment which has allowed an efficient resolution to this process.

“We are pleased that we now have certainty in this area, enabling us to release £117m of cash to the business today, and in the region of £63m over the coming years as we realise the remaining losses.”

The Eurobond debt structure was put in place under a previous financing in 1999 to acquire Drax Power Station.

Under this structure, the group pre-paid an amount of interest which facilitated its refinancing and listing on the London Stock Exchange in 2005.