U.S. Markets

Areva says fully funded for this year despite two billion euro loss

PARIS (Reuters) - French nuclear firm Areva AREVA.PA reported a 2 billion euro ($2.2 billion) net loss for 2015 on Friday, more than double analysts' expectations, adding to investor concerns about its finances a day after it arranged an emergency loan.

French state-controlled nuclear group Areva's Chief Executive Philippe Knoche attends a news conference to announce the company's 2015 annual results where he reported a 2 billion euro ($2.2 billion) full-year net loss in Nanterre, France, February 26, 2016. REUTERS/Charles Platiau

The company, 87 percent state-owned, blamed its fifth consecutive annual loss on provisions for its Finland reactor project and restructuring costs, but said it was fully funded for this year thanks to bank loans.

That failed to assuage investors who worry about Areva’s ability to repay its debt. Its shares tumbled 8 percent to a new record low on opening, but later recovered to stand one 2 percent lower.

Analysts polled by Reuters had expected a net loss of 690 million euros.

Areva shares were suspended Thursday after management delayed publication of results to account for the arrangement of an emergency 1.1 billion euro bridge loan, needed to meet a 975 million euro bond repayment due Sept. 23.

The share has shed 58 percent over the past six months and lost 96 percent from 2007 highs after four years of losses wiped out its capital and forced a government rescue.

Areva will need to repay the bridging loan in Jan. 2017, an 800 million euro bond in October 2017, and about 2 billion in credit lines by January 2018.

It said on Friday a 5 billion euro share issue, which the state has promised to subscribe to, would be launched in the first quarter of 2017.

The planned sale of its reactor unit Areva NP to state-owned utility EDF EDF.PA will also not be finalised this year and Areva does not expect to receive the proceeds of that sale in 2016, chief financial officer Stephane Lhopiteau said.

The timing of the sale has been delayed repeatedly by disagreement over valuation and EDF’s refusal to take on responsibility for Finland-related claims.

“We consider that the sale of Areva NP will be finalised in 2017,” Lhopiteau said.

At the end of 2015, Areva had 800 million euros in cash, he said. Early in 2016 Areva has also drawn 2 billion euros of credit lines, while the bridging loan will provide total cash of 3.9 billion euros for this year.

“This should be largely sufficient for our 2016 needs,” he said, and confirmed Areva needs to repay a one billion euro bond in September.

He estimates Areva will end 2016 with net cash of 700 million to 1.2 billion euros depending on whether it can sell its Areva TA nuclear propulsion unit and its Canberra radiation measurement unit this year.

He said it was not certain yet how much Areva would receive for the reactor unit, which EDF has valued at 2.5 billion euros.

Areva wants to sell 85 percent of it, but EDF has said it will only buy between 51 and 75 percent and is now looking for minority investors.

“We hope for 85 percent of 2.5 billion,” Lhopiteau said, adding that Areva also hopes to get 85 percent of the additional 350 million euros which depends on the financial performance of Areva NP in 2017 and 2018.

Lhopiteau said there was progress in talks with Finnish customer TVO about settling an arbitration suit in which the two sides are claiming billions from one another over delays to the Olkiluoto 3 (OL3) reactor Areva is building.

He said that including the 905 million euros worth of provisions taken on OL3 in 2015, cumulative provisions on the project now stand at 5.5 billion. Part of the 2015 provisions were related to a possible settlement with TVO, he said, and he was cautious about a final startup date for the reactor.

“We are in talks with the client to see whether we need to delay or not, but for now we stick with our target of starting the reactor by end December 2018,” he said.

Areva’s 2015 loss narrowed to 2.04 billion euros from 4.83 billion in 2014. It posted core earnings of 685 million euros, up from 471 million and revenue rose 1.9 percent like-for-like to 4.2 billion.

($1 = 0.9048 euros)

Editing by James Regan and Susan Fenton