Restructuring
National Power of the UK will restructure itself into a domestic and international arm. The announcement was made simultaneously with its interim results statement.
Under the plans, it will be split into an integrated UK operation called npower, and International Power for its global businesses. The cost of restructuring will be £25 million.
National Power’s structure is such that the regulated returns on its UK operations support its foreign ventures which require considerable cash investment. Therefore, the international arm will be keen to retain some UK generation capacity to maintain cash flow. This is likely to be a combined cycle gas turbine facility. Didcot B is its largest gas-fired station, with a capacity of 1350 MWe. This is considered the most likely plant to be part of International Power, although Deeside (500 MWe) and Little Barford (680 MWe) are also options.
The UK business would have a portfolio of 10 GWe and 2.5 million customers after the divestments. The new npower entity plans to increase its customer base to 5 million. It will also expand beyond the energy sector.
The international arm will assume control of all National Power’s interests outside the UK, with stakes in 22 GWe of capacity. The group is expected to maintain growth in North and Southern America.
The bulk of npower’s revenue will come from generation, although expansion of the retail side is being heavily promoted.
Speculation is mounting that National Power will be subject to a takeover bid. Potential bidders include: AES; RWE; and Centrica. A bid is likely to succeed, because National’s share price has fallen by 20 per cent over the last year.
Salomon Smith Barney will manage the demerger arrangements.
TablesTable of National Power generation asset sales