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Bloomberg
Electricite de France SA plans to sell about €4 billion of new shares and deepen cost cuts to bolster its finances as the company works to decide whether to move forward with a controversial nuclear power plant project in the U.K.
EDF will submit a plan for the capital increase by the closing date of its 2016 accounts, subject to market conditions. It’ll sell the €10 billion of assets, including a stake in French power grid operator RTE, by 2020, the statement shows. Europe’s biggest power company also deepened planned operational spending cuts to €1 billion by 2019.
EDF is taking measures to shore up its finances after weeks of negotiations in which the government, which owns 85 percent of EDF, had resisted the company’s demand for a share sale to raise capital.
In its own statement, the French government said it’ll subscribe €3bn to EDF’s capital increase and take its 2016 and 2017 dividend payments in shares. It also said the sale of the RTE stake should take place by the end of this year.
Speculation has mounted over the future of the Hinkley Point nuclear plant since EDF Chief Financial Officer Thomas Piquemal resigned last month amid concerns that the £18 billion ($26 billion) project would put the company under too much financial strain. While French Economy Minister Emmanuel Macron, who backs the project, said the government would re-capitalize the company if needed, some workers remained opposed. Labor unions have threatened to take the company to court if employees weren’t consulted before a decision on the project is made.
Delaying Decision
EDF’s CEO Jean-Bernard Levy pushed back the decision on the Hinkley plant, previously scheduled to be made by May, by several months to consult more with employees. The company has held off on a decision even after forming a partnership with China General Nuclear Power Corp. and securing guaranteed power prices from the U.K. government at almost three times the current market rate for 35 years.
The company’s finances have been hit by falling power prices and rising competition, threatening the cash flow it needs to pay for a renovation of its French reactors by 2025. Total investments, including new projects such as Hinkley Point, should range between €12.5 billion to €13.5 billion a year over the next three years.