Drax Group Plc hired Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc to arrange a new 400 million-pound ($645 million) credit line to help convert Western Europe’s largest coal-fired power station into one fueled by biomass.
The new loan will replace an existing 310 million-pound revolving credit, according to an emailed statement from RBS. The loan pays interest of 200 basis points more than the London interbank offered rate, data compiled by Bloomberg show. Under a revolver, money can be borrowed again once it’s repaid. A basis point is 0.01 percentage point.
Drax raised 190 million pounds in a share placement last week after selling 9.99 percent of its existing share capital at 520 pence a share. The company plans to spend 650 million pounds to 700 million pounds converting the plant and is also seeking a 100 million-pound loan to cover costs, according to the statement.
The Selby, England-based company is changing the power station to take advantage of higher margins on biomass fuel compared with coal.