EDF sets UK sale timetable - sources

By Greg Roumeliotis and Alex Chambers

AMSTERDAM/LONDON (Reuters) - French utility EDF (EDF.PA) has set an indicative timetable in its sale of Britain's biggest electricity distribution network as industry and financial parties begin to form consortiums, sources said.

EDF has sent out what bankers call a 'teaser' to potential bidders previewing the sale of its three distributor network operators (DNOs), whose regulated asset value (RAV) now stands at close to 4 billion pounds, several sources familiar with the process said.

The company has privately communicated a draft timeline that calls for the sale to be launched in early December, after British regulator Ofgem determines the allowed returns of the DNOs, three of the sources said.

EDF then plans to seek first-round bids around the middle of January with binding bids due by the end of the first quarter of 2010, two of the sources said.

EDF declined to comment. Its shares were up 1.22 percent at 37.45 euros at 8:44 a.m..

On offer are three power networks that serve 20 million people in London, the east and southeast of England, areas that account for 40 percent of British GDP. EDF Energy, which runs the DNOs, made a pre-tax profit of 189 million pounds in 2008.

EDF has called the process an evaluation of options and a source close to the company said it was not certain that a sale would ultimately take place.

CONSORTIA FORMING

The regulated cash flows of the assets are attracting heavy interest from infrastructure funds and institutional investors who are keen to team up with companies that have experience in running DNOs, sources close to the interested parties said.

Canada Pension Plan (CPP) is looking for a consortium to join while Canadian peer Borealis has already teamed up with Scottish & Southern Energy (SSE) (SSE.L), two people familiar with the matter said.

Infrastructure funds from Macquarie (MQG.AX), 3i (3IN.L) and IFM Infrastructure have also expressed interest, sources close to the funds said. National Grid (NG.L) is also preparing a bid, two sources close to the company said.

National Grid, SSE, Macquarie and 3i declined to comment while CPP, Borealis and IFM were not available for comment.

More or new combinations could emerge ahead of the sale's launch as other major players, such as infrastructure funds from RREEF, Alinda, GIP and Blackstone (BX.N), decide on whether they will participate, a number of industry sources said.

A challenge for any buyer will be bringing EDF's DNOs to the efficiency levels achieved by other grids and sourcing the financing for what has to be a huge equity check, people familiar with the assets said.

EDF has undertaken what bankers described as a pre-leveraging of the UK operating companies it plans to sell. It is doing this via a 950 million pound bond issue in three tranches with 7, 22 and 27-year maturities.