PowerGen Announces Acquisition of Yorkshire CoGen Limited.

LONDON--(BUSINESS WIRE)--Jan. 4, 1999--PowerGen plc (NYSE: PWG), the international power company, today announced the acquisition of Yorkshire CoGen Limited ("YCL") for (pound)94.9 million in cash from Yorkshire Electricity Group plc. YCL is a generation business whose assets consist of 176 MWe of plant operating or under construction and 56 MWe of plant contracted but not yet under construction: -0-

Description               Capacity       Site
CCGT - operational        50 MWe    Thornhill, Dewsbury, Yorkshire
Peaking plant             55.6 MWe  7 sites in Yorkshire
CHP - operational         13.9 MWe  2 hospital sites, 1 industrial site
CHP - under construction  56 MWe    Hays Process Chemicals, Cheshire
CHP - contracted          56 MWe    Hickson & Welch, Castleford

All of the output from the plant which is operating or under construction is sold under contracts lasting up to 20 years. The CCGT and peaking plant are contracted to Yorkshire Electricity and are embedded in the latter's distribution network. The combined heat and power ("CHP") plant is contracted to a number of host companies, with Yorkshire Electricity taking some of the excess output.

YCL is complementary to PowerGen's existing business, PowerGen CHP Limited, a leading developer and operator of CHP plants, with five schemes commercially operational. Completion of a 130 MWe scheme in the summer of 2000 will increase PowerGen CHP's total capacity to 308 MWe; its investment to date totals some (pound)150 million. The acquisition of YCL reinforces PowerGen's commitment to growing its business in this market sector. PowerGen expects to achieve cost savings as a result of the acquisition.

In the year to March 31, 1998, YCL reported profits after tax of (pound)4.9 million. After adding back inter-company debt of (pound)46.4 million, YCL had net assets at March 31, 1998 of (pound)55.7 million. The purchase will be financed from existing debt facilities.

PowerGen expects the acquisition of YCL to enhance earnings per share.

Nick Baldwin, PowerGen's Executive Director UK Operations said, "We are very pleased to have acquired a quality business which is a good fit with our existing successful CHP business."

PowerGen's ADR, equivalent to four ordinary shares, trades on the New York Stock Exchange under the symbol PWG. PowerGen's ordinary shares trade on the London Stock Exchange and prices may be accessed on Bloomberg under the symbol PWG LN, on the Reuter Equities 2000 Service under PWGN.L and on Quotron under PWGPU.EU.