BRUSSELS/PARIS (Reuters) - European Union antitrust regulators approved the French government’s plan to inject 4.5 billion euros ($4.8 billion) into embattled nuclear group Areva AREVA.PA, saying the rescue would not unduly distort competition.
The European Commission’s ruling will allow Areva, whose equity has been wiped out by years of losses, to restart as a smaller firm focused on uranium mining and nuclear fuel production and recycling.
“Today’s decision paves the way for a viable future for Areva based on a sustainable restructuring plan,” EU competition commissioner Margrethe Vestager said in a statement on Tuesday.
The Commission said the aid for 87 percent state-owned Areva was subject to conditions, notably a positive conclusion of nuclear regulator ASN’s safety tests on an Areva-designed reactor under construction for utility EDF (EDF.PA) in Flamanville, France, as well as EU approval of the planned sale of Areva’s reactor business to EDF.
This means the planned state aid may not be paid until then, said the Commission, which therefore also approved a 3.3 billion euro ($3.5 billion) state loan to Areva, aimed at bridging its liquidity needs until the capital injection can take place.
ASN has said it expects to rule by end June on whether the Flamanville reactor can start up as planned in 2018. In 2015, Areva discovered carbon concentrations in the steel of the reactor vessel, which can weaken the resilience of the steel.
The head of French state holding agency APE said in October that EU competition authorities were not expected to rule on the planned takeover of Areva’s reactor unit by state-owned EDF before the summer of 2017.
Following the Commission’s statement, Areva said its board would meet on Wednesday to determine the terms of the capital increase, on which its shareholders will vote on Feb. 3.
The new nuclear fuel group, provisionally called Areva NewCo, will get a 3 billion euros capital increase, of which 2.5 billion euros will come from the state. Areva said last month two investors have made a 500 million euro offer for a combined 10 percent stake in NewCo.
A source familiar with the situation said the two investors are Japan’s Mitsubishi Heavy Industries (7011.T) and JNFL. Talks are continuing with China’s National Nuclear Corporation about also taking a minority stake in NewCo.
Legacy Areva SA - the firm left over after NewCo splits off and the reactor unit is sold - will get a 2 billion euro capital increase and will hold the liabilities related to the troubled Olkiluoto 3 project in Finland.
Areva and its Finnish customer TVO are claiming billions of euros from one another in an arbitration suit over the project.
Green Party European Parliament member Claude Turmes said leaving the Olkiluoto claims in Areva SA amounted to a nationalization of losses and questioned the EU’s approval.
“The Commission should not let the French state use taxpayers’ money to rescue a failed technology,” he said.
Writing by Geert De Clercq; Editing by Sudip Kar-Gupta and Mark Potter