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E.ON bond sale in deal preparation.

Europe's biggest listed utility E.ON launched a jumbo euro and sterling bond sale yesterday to help finance its acquisition of Midland electricity distribution company Powergen.

The German company launched a pounds 2.6 billion seven-year tranche to be priced at 54 basis points over the swaps curve and a pounds 562 million 15-year euro tranche to be priced at 75 basis points over the same benchmark.

E.ON's pounds 500 million ten-year sterling bond is to be priced at 105 basis points over UK government bonds and its pounds 850 million 30-year sterling bond at 120 basis points over. A Bear Stearns report on E.ON last week saw the new deal as a welcome addition to the utility segment of the euro credit market, providing a benchmark which would allow investors better to price some of the other bonds in the sector.

ABN Amro, Barclays Capital, Goldman Sachs and Dresdner Kleinwort Wasserstein are lead managers on the deal. E.ON is rated AAby credit ratings agency Standard & Poor's and a notch higher at Aa2 by Moody's Investors Service.

Final regulatory approval for the Powergen acquisition is now expected in June, a month later than hoped. Once the Powergen deal is approved, E.ON is thought likely to bid for an integrated, regulated utility in the US mid-west, using Powergen's Kentucky-based LG&E utility as a springboard into the lucrative, highly fragmented US power market.
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Title Annotation:Business
Publication:The Birmingham Post (England)
Geographic Code:4EUUK
Date:May 18, 2002
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