Power giant pays high price for loan

INTERNATIONAL Power has agreed to pay hefty interest rates of 11% to 13% to three banks for up to $950m (£530m) of bridging finance for its acquisition of Edison power stations.

It hopes the loan will last for only a few months, but in certain circumstances it could go on for nine years.

The rates - double the amount paid by UK homebuyers - mean that the deal could be very expensive if things go wrong.

Details are revealed in International Power's circular to shareholders on the £300m rights issue for the deal.

This also shows that its acquisition partner Japan's Mitsui has an option to return its stake to IP.

IP chairman Sir Neville Simms unveiled the £1.23bn purchase of 13 power plants last month. The company is paying £376m cash - largely funded by the rights issue and a modest sum compared to its £1.9bn market value.