RLPC-Drax seeks forward start loan-bankers

LONDON, July 7 (Reuters) - British coal-fired power station operator Drax Group (DRX.L) is seeking a forward start loan to extend the tenor of its existing term loan when it matures in December 2010, banking sources said on Tuesday.

Forward starts have become a popular way for borrowers to lock in loans ahead of maturity in return for increased margins and fees.

Drax said in June that it would use the proceeds of a 108.2 million pound ($175.2 million) share placing to reduce a 370 million pound term loan to protect its investment grade rating.

Drax also said that it would refinance the reduced term loan extending the maturity by two years until December 2012, leaving the company's letter of credit and working capital facilities in place.

Drax tapped the European syndicated loan market for an 800 million pound financing in 2005 via Barclays, Commerzbank and ING.

That deal was split into a five-year 500 million pound term loan, a seven-year 200 million pound letter of credit facility and a five-year 100 million pound revolving credit facility.

In May, Standard and Poor's downgraded Drax Finance's senior secured debt rating to BBB- from BBB. ($1=.6176 Pound) (Reporting by Alasdair Reilly and Zaida Espana; Editing by Jon Loades-Carter)