Aug. 25, 2003 — MMC is in talks with its capital partners to raise the funds necessary to capitalize a UK asset recovery vehicle (ARV) to acquire between six and eight gas and coal-fired UK power stations. MMC has been working on this initiative for over six months.
MMC will seek to own/control the Drax Power station and place it into the UK ARV structure. Drax ultimately belongs in the UK ARV, where it will enjoy the benefits of MMC’s and other operating partners credible and independent management. Drax will materially benefit from being part of a larger UK generation portfolio, where the overall cost structure including credit, hedging, operations and maintenance and administrative will be reduced and spread across a larger portfolio and company structure.
No bid has been tabled as MMC does not feel compelled to stick to the Friday deadline imposed by other bidders. MMC firmly believes the creditors/owners have multiple options to explore, beyond existing offers on the table. Time is on MMC’s and the creditors/owners side in this transaction and MMC feels no pressure to react to other parties.
MMC has very good relations with the various commercial banks and distressed debt (bond and bank debt) funds in the capital markets. MMC has held discussions with a number of these funds regarding the aggregation of Drax debt and moving the control of Drax into the UK ARV, under MMC independent management and oversight.
MMC initially avoided a direct offer for Drax under the AES management regime and unclear creditor control/direction. The creditors have now firmly established an interim group of Directors to facilitate an orderly transfer of Drax to a credible and independent firm such as MMC.
MMC is of the firm belief that the Drax creditors will not allow the Power Plant to be transferred to and managed by a conflicted financial institution or industry participant. There are multiple conflicts of interest involved with the existing bids, and creditors/owners will get better long-term value from MMC. When asking creditors keep capital on the table and at risk, credible and independent management become a paramount issue. MMC has no conflicts of interest in the UK.
Karl W. Miller Senior Partner Miller, McConville, Christen, Hutchison, & Waffel LLC firstname.lastname@example.org 910-279-6676 www.millermcconville.com