European Commission approves Areva restructuring plan

17 January 2017

The European Commission has approved the restructuring of France's Areva group, ruling that the French government's plan to grant a capital injection of €4.5 billion ($4.8 billion) into Areva does not breech European Union (EU) state aid rules.

France notified the commission in April last year of the planned restructuring of Areva, which is 86.5% state-owned, in a bid to restore the group's competitiveness. The plan will see Areva divest its nuclear reactor business, focusing its activities instead on its nuclear fuel cycle business. The government intends to inject €4.5 billion of public capital to help the company bear the costs of the restructuring.

EU member states are free to determine their own preferred energy mix, but the European Commission is responsible under EU state aid rules to ensure that public financing does not unduly distort competition in the European single market. In July, the commission launched an in-depth investigation to verify that the proposed Areva restructuring would not distort the market, looking in particular at whether the assumptions underlying the restructuring plan were sufficiently realistic to enable the group to become viable again in the long-term without continued state support.

In a statement issued 10 January, the commission said its investigation had shown that Areva's withdrawal from the nuclear reactor business would allow the group to focus on a clear and profitable business in the nuclear fuel cycle, as demonstrated by the financial projections of the newly created group. "The complete divestiture of Areva's reactor business will significantly reduce the group's activities in the nuclear sector and thereby limit the distortions of competition brought about by the state support. A competitive Areva will also contribute to ensuring Europe's security of uranium supply," it said.

The commission found that Areva will finance a "significant part" of the restructuring costs with proceeds from planned asset sales, including the divestiture of its reactor business to EDF. The contribution is subject to a review under EU merger control rules. It is also subject to a "positive result" of tests ordered by the French nuclear regulator, the Autorité de Sûreté Nucléaire, on the Areva-supplied reactor vessel at Flamanville unit 3. As the restructuring aid may not be paid until then, the commission said it has also approved a loan of €3.3 billion from the French state to Areva, which would bridge Areva's liquidity needs until the capital injection can take place.

Margrethe Vestager, European commissioner responsible for competition policy, said the decision paved the way for a "viable future" for Areva based on a sustainable restructuring plan. "The plan strikes the right balance between improving the group's competitiveness and limiting distortions of competition created by the public financing," she said.

In November, Areva and EDF signed a contract for the sale of Areva NP's reactor business. EDF is to take exclusive control of the new entity, valued at €2.5 billion ($2.7 billion) and referred to as 'New NP'. The creation of a new entity focused on mining, the front-end and the back-end of the nuclear fuel cycle was announced by Areva in February. The process for transferring nuclear fuel cycle activities to the new entity, known as NewCo, formally began in August 2016.

The French authorities must submit regular monitoring reports to the European Commission until the end of the restructuring period, in 2019.

Researched and written
by World Nuclear News