December 15, 2017 / 12:09 PM / a year ago

UPDATE 1-EDF board approves buying 75.5 percent of Areva NP by end 2017 - sources

* Areva not to keep stake in reactor unit after all

* Guarantee requirements on Taishan, Flamanville lifted

* Deal must be signed by year-end (Adds detail on valuation)

By Geert De Clercq

PARIS, Dec 15 (Reuters) - The board of French state-owned utility EDF has given final approval for the acquisition of a 75.5 percent stake in Areva NP, the nuclear reactor construction unit of fellow state-owned nuclear group Areva, by year-end, three sources said.

One said the board had lifted required guarantees on the successful completion of Areva-designed EPR reactors in Flamanville, France, and Taishan, China, as these reactors should be starting up in the coming year.

The source also said that Areva would not, as it had originally wanted, keep a 15 percent stake in its former reactor unit because of European Commission objections.

The companies have said previously that Japan’s Mitsubishi Heavy Industries (MHI) will buy a 19.5 percent stake in Areva NP, while French industrial engineering firm Assystem will buy a 5 percent stake.

EDF and Areva declined to comment.

Another source said that if the agreement is not finalised by year-end, the situation would go back to “square one”.

Under a Nov. 2016 agreement, EDF agreed to buy between 51 and 75 percent of Areva NP based on a value of 2.5 billion euros for 100 percent of its capital..

French daily Le Figaro reported on Wednesday that the 2.5 billion euro valuation would be reviewed “slightly downwards” to take into account the impact of problems with manufacturing quality and document falsification at Areva’s foundry unit Le Creusot.

EDF’s acquisition of Areva NP is is part of a state-led financial rescue operation for Areva which was decided by the previous government in June 2015, when current French President Emmanuel Macron was economy minister in Francois Hollande’s socialist cabinet.

Construction problems at its reactor projects, an ill-timed investment in an African uranium mine and a dearth of orders following the 2011 Fukushima disaster led to years of losses at Areva and wiped out its equity.

The sale of Areva NP is the last step in a restructuring that unwinds Areva’s once much-vaunted model of an integrated nuclear group that mines and enriches uranium, produces nuclear fuel, builds reactors and recycles spent fuel.

Following the sale of Areva NP and other units, Areva is now a uranium mining and nuclear fuel group. (Reporting by Geert De Clercq and Benjamin Mallet; Editing by Richard Lough/Jeremy Gaunt)

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