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Drax Potential as M&A Target Boosted on Final Strike Price: UBS 2013-12-05 07:24:24.367 GMT
By Nadine Skoczylas Dec. 5 (Bloomberg) -- Increased rev. confidence, debt carrying capacity after U.K. Treasury yday confirmed final strike prices for biomass conversion at GBP105/MWh increase probability Drax could become M&A target, UBS writes in note. * Drax’s U.K. high thermal efficiency should let co. get returns nearer 20% from biomass vs sub-10% for avg developer: UBS * Sees possibility for 4th unit at its coal-fired plant to be converted to burn biomass as “highly likely” * 1,220p “blue sky valuation” if 6 units converted * NOTE: U.K. published a list of final strike prices for biomass and electricity from renewables in its national infrastructure plan yday * Confirmed draft proposal first announced in June of GBP105/MWh, that was ahead of analyst ests. at the time * NOTE yday: Drax also said U.K. confirmed both of co.’s two remaining units to be converted meet eligibility for early Contracts for Difference program
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To contact the reporter on this story: Nadine Skoczylas in Jerusalem at +972-2-640-1103 or nelsibai@bloomberg.net
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