BRITISH ENERGY POWER & ENERGY TRADING LTD (2) EGGBOROUGH POWER (HOLDINGS) LTD (3) EGGBOROUGH POWER LTD v (1) CREDIT SUISSE (2) AMPERE LTD (3) AMPERE 1 LTD

[2007] EWHC 1428 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Langley, 19 June 2007

Banking – Agency – Agreement between borrower and banks for loan restructuring, including option agreements containing restrictions on transfer – Agreements signed by one bank as “agent” – Whether other banks bound by restrictions on transfer

BEP acquired a power station using finance provided by a consortium of banks. The loans were restructured, the banks agreeing to write off about £340 million of principal debt due and also agreeing to a new credit facility of £150 million. BEP in turn agreed to grant options to purchase the shares in or assets of EPL. The option agreements were entered into by one bank, BB, as “agent and security trustee” for the other banks. The options contained restrictions on transfer by the banks. CS, the successor in title to much of the debt, asserted that it was not bound by the option agreements and that BB had acted for its own account. A further issue was whether, if CS was a party to the option agreements, whether an agreement between CS and Ampere to consolidate existing sub-participations by transferring them to Ampere was void as contrary to public policy. The court held that: (1) BB had entered into the option agreements not just on its own behalf but also on behalf of the other banks as it made no sense for BB but not the others to be bound; (2) the Ampere transaction would infringe the terms of the option agreements.