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€7bn needed to keep loss-making nuclear company AREVA alive

scrutiny-on-costsLossmaking Areva needs €7bn capital injection, Ft.com Michael Stothard in Paris, 30 July 15  Struggling French nuclear group Areva on Thursday disclosed it needed a bigger than expected capital injection worth €7bn as the company also unveiled a far-reaching agreement with EDF on asset disposals and other projects.

The two companies — both state-controlled — agreed in principle that EDF will pay €2bn for a 75 per cent stake in Areva’s reactor unit, called Areva NP, in a radical reshaping of the French nuclear industry that has come after months of tense negotiations……..

Following the deal, Areva, which reported a €4.8bn net loss last year, will be reduced to a nuclear fuel company that mines, enriches and then disposes of uranium. The heart of the company — designing, building and servicing nuclear reactors — is being sold off.

Areva said that overall it would need €7bn in capital over the next two years, however, meaning that as much as €5bn will be required from sources other than EDF, the French utility group. Much of these additional funds are likely to come from a government-backed capital raising.

The French government may have to contribute between €4bn and €5bn, far more than the €2bn to €3bn that ministers had hoped for just a few months ago, according to people familiar with the situation, although the exact level of the capital raising was not announced on Thursday.

Areva said it could secure €0.4bn from selling some other assets including Canberra, its nuclear measurements subsidiary, and as much as €1.2bn from other sources of equity financing. This suggested a government-backed capital raising that might be closer to €4bn.

On Thursday the two companies also said they would set up a dedicated company to be 80 per cent owned by EDF and 20 per cent by Areva NP, aimed at improving the design and management of brand new reactors projects.

One of the problems that has weighed on Areva in recent years has been cost overruns at key projects, particularly the Olkiluoto 3 reactor in Finland, which is 10 years behind schedule and prompted the company to take €3.9bn in impairment charges………..http://www.ft.com/cms/s/0/110c0476-368c-11e5-b05b-b01debd57852.html#axzz3hPaCUU5g

July 31, 2015 - Posted by | business and costs, France, politics

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