Drax tackles debt pile with £108m cash call

Power station operator Drax today raised £108.2million to reduce its £370 million debt burden after its credit rating was downgraded by Standard & Poor's.

Nearly 25.5 million new shares placed in the market through Deutsche Bank were snapped up by investors for 425p each. The shares were down 17¼p to 431¾p tonight.

Ratings agency S&P last month downgraded the group's debt rating to BBB minus from BBB and slapped on a "negative outlook".

Drax finance director Tony Quinlan said: "We've discussed it with S&P, and we're confident these actions will help address their concerns. We could have done nothing, but it was not a risk we wanted to carry."

Drax returned £180 million to shareholders last year and today insisted its dividend policy was "sacrosanct" despite the S&P downgrade and its need to raise new cash.

The firm provides 7% of the UK's electricity.