Areva to raise cash

01 July 2009

The supervisory board of France's national nuclear company Areva has finalized steps to be taken to finance the group's long-term development plan. These include selling a stake of about 15% and the possible sale of its power grid operations.


The company said that, based on a proposal from its executive board, the supervisory board has decided to "open up its capital to strategic and industrial partners, to the value of 15%, mainly by increasing its capital." Areva is also launching an employee shareholders program.


Areva's supervisory board has also asked the executive board to put the group's Transmission and Distribution (T&D) division up for sale. The T&D division supplies products, systems and services dedicated to electricity transmission and distribution from the power plant to the final user. Areva said that an open call for bids will be launched and a decision whether or not to sell the division and the choice of potential buyer will be taken before the end of 2009. Alstom, which previously owned the T&D division, is considered a potential purchaser.


Areva, which is currently 93% owned by the French government, is also considering selling its stake in French multinational mining and metallurgy company Eramet and in ST Microelectronics, the world's fifth largest semiconductor company. Areva noted, "In any case, these stakes will remain in the public sector because of their strategic nature."


Areva did not make the connection but it would be hard not to view these moves as consequences of the departure of Siemens from the Areva NP joint venture, which left the French firm with a responsibility to buy Siemens' 34% stake for an unknown sum set by the firms in 2001.


Areva noted that the group is set to continue its cost reduction program and to improve operational performance.


Jean Cyril Spinetta, chairman of Areva's supervisory committee, commented: "The group must be able to pursue an ambitious investment program to take advantage of its growth. The plan that has been finalised by the shareholders will completely enable it to do so."


Areva CEO Anne Lauvergeon said, "This financing will enable us to maintain our lead and meet the growing needs of our current and future customers."


MHI plans talks


Proceeds from the capital raising will help the financing needs of Areva, which wants to invest €10 billion ($14 billion) over the next three years, she told French RTL radio. She said that Japan's Mitsubishi Heavy Industries (MHI) was a potential purchaser of a stake in Areva.


Separately, MHI spokesman Hideo Ikuno has told Bloomberg that the company is planning for "a formal discussion with Areva, because we would properly and constructively consider an investment if we receive an official request from the French side."


MHI and Areva have worked together since 2006 under a joint venture named Atmea to develop an evolutionary 1100 MWe pressurised water reactor. They expect to have this ready for licence application by 2010. The reactor is regarded as 'mid-sized' relative to other Generation III units and will be marketed primarily to countries embarking upon nuclear power programs.


Beyond the Atmea reactor, Areva and MHI have expressed interest in cooperating on equipment procurement, services, used nuclear fuel management, and development of fast-breeder and high-temperature reactors.


In February, Mitsubishi and Areva signed the shareholders agreement to form a joint venture company in the nuclear fuel fabrication business. The partners are preparing to build a new factory in the USA. The joint venture will supply Japanese customers with uranium fuel assemblies for pressurized water reactors (PWRs), boiling water reactors (BWRs) and high-temperature gas-cooled reactors (HTGRs), as well as uranium-plutonium mixed oxide (MOX) fuel assemblies.