Areva Gets Capital Funding Boost, New Investors
France’s EDF Throws Areva a Financial Lifeline
(Reuters & French news media sources) France moved to buttress its nuclear industry with utility Electricite de France SA (EDF) agreeing to buy the reactor construction business of state-run peer Areva for 2.5 billion euros ($2.7 billion).
Areva is behind schedule on projects in France, Finland and China, and the costly delays have raised concerns at EDF as it works with Areva to build two new nuclear plants at Hinkley Point in Britain.
The contract signed with EDF clears the way for Areva to raise five billion euros in new capital, largely from the French government.
“Today marked a new step in the restructuring of France’s nuclear industry which the government is pursuing with determination,” Economy Minister Michel Sapin said.
Areva said in a statement that EDF will buy as much as 75% in Areva NP, as the unit is known, in a deal that values it at €2.5bn ($2.68bn). EDF plans to sell a 24% stake to other investors in the future.
The deal excludes a series of potential liabilities related to the nuclear reactor manufacturing unit, such as potential losses related to the construction of the Olkiluoto-3 nuclear plant in Finland and possible losses related to deficient components made at the Le Creusot forging plant in France. Those potential liabilities will remain in Areva.
The takeover is part of a French government plan for a €8bn plan to rescue Areva after five years of consecutive losses.
The sale to EDF of Areva NP is expected to be final in the second half of 2017 and hinges on the results of tests carried out by the French regulator on the primary circuit of the Flamanville-3 reactor and satisfactory audits at Areva’s Le Creusot, Saint-Marcel and Jeumont forging facilities.
Chinese, Japanese, Kazakh companies eyeing Areva stakes
Nuclear companies from China, Kazakhstan and Japan are in discussions with Areva about taking stakes in the French reactor builder.
According to Reuters, French online news website BFM Business reported that China National Nuclear Corporation (CNNC), Mitsubishi Heavy Industries, and Kazakhstan’s Kazatomprom were each set to buy up to an 11% stake in Areva.
The three will inject 400 million euros each, BFM reported. It said they would be able to chose board members and that the French government’s stake in Areva would fall to 67% of capital.
Neither EDF nor Areva would independently confirm the investment report.