Areva looks to finalize reactor business sale

28 January 2016

Areva's board of directors has given a mandate to its CEO to finalize negotiations on EDF's acquisition of a majority stake in its nuclear reactor business. The moves follows agreement by the two companies on the final valuation of Areva NP.

EDF said its board yesterday agreed on a final valuation of Areva NP's activities at €2.5 billion ($2.7 billion). The companies had earlier agreed on an indicative price of €2.7 billion ($2.9 billion) at the closing date.

EDF noted: "This amount is likely to be adjusted, firstly, upward or downward depending on the financial statements prepared on the date of completion of the transaction, and secondly, with a possible price earn-out of up to €350 million ($382 million) subject to the achievement of certain performance objectives measured after the closing date."

EDF signs Jaitapur MOU

EDF announced on 26 January that it had signed a memorandum of understanding with Nuclear Power Corporation of India (NPCIL) for the construction of six EPR units at the Jaitapur site in India's Maharashtra state.

Its announcement came the day after French president Francois Hollande and Indian Prime Minister Narendra Modi said techno-commercial negotiations for the project will be completed by the end of 2016. A contract for pre-engineering studies was signed by Areva and NPCIL in April 2015.

EDF said, "The goal in the next few months is to continue with the work initiated by Areva and NPCIL in April 2015 to secure certification for the EPR reactor in India and finalize the economic and financial conditions and the technical specifications of the project."

Areva's board, which also met yesterday, has now given CEO Philippe Knoche a mandate to finalize the negotiations. However, the company noted that completion of the transaction, scheduled for next year, "remains subject to consultation with employee representative bodies and to the approval of the competent authorities for such a transaction".

In a statement, EDF said it will be in a position to make a binding offer for Areva NP "after consultation with the Central Works Council and authorization by the board of directors, once the arrangements to completely immunise EDF against the costs and risks of the Olkiluoto 3 project and all the final contractual documentation are finalized".

In late-July 2015, EDF and Areva announced they had signed a memorandum of understanding that sets out the principal terms and conditions for EDF to take a majority in Areva NP. Areva will hold a stake of between 15% and 25%, allowing the potential participation of other minority partners. In November, Japan's Mitsubishi Heavy Industries said it would prepare a proposal for taking a minority stake in Areva's reactor business.

At its meeting yesterday, Areva's board also approved the principle of a capital increase of €5 billion ($5.5 billion), "which aims to restore the group's balance sheet situation". It said the French government, as its leading shareholder, "will take part in this and will ensure its success, in compliance with European regulations".

Areva noted that it will report a net loss in fiscal 2015 due to the recognition of provisions, "in particular for the restructuring announced in May 2015, supplemental costs for Olkiluoto 3 and renewables contracts, the impact of the Cigéo repository project on end-of-lifecycle operations, and an additional write-down of mining assets".

Researched and written
by World Nuclear News