Areva implements capital increases
The restructuring of France's Areva group has taken a step forward with the implementation of a €2.0 billion ($2.3 billion) capital injection from the French state. NewCo - Areva's separated nuclear fuel cycle activities - is also to receive a €2.5 billion capital increase from the state by the end of this month.
French utility EDF agreed in July 2015 to take a stake of between 51% and 75% in Areva SA's reactor unit in a government-backed plan to revitalise the country's nuclear power industry. The restructuring includes the government granting a capital injection of €4.5 billion ($5.1 billion) into Areva. The reactor operations to be sold have been transferred to a subsidiary wholly owned by Areva NP, referred to as 'New NP'. Contracts for the Olkiluoto 3 (OL3) EPR project in Finland and for resources required to complete that project, and some contracts relating to components forged in the Le Creusot plant, are not included in the sale. Those contracts will remain within Areva.
Areva began the process of splitting off its nuclear fuel cycle activities into 'NewCo' in August last year, combining the Areva Mines, Areva NC, Areva Projects and Areva Business Support companies and their respective subsidiaries.
The board of Areva SA yesterday initiated the implementation and recorded the conclusion of the Areva SA capital increase of €2.0 billion ($2.3 billion) reserved for the French state. This was done through the conversion into capital of the advance from the shareholder account granted to Areva SA earlier this year. The French State now holds around 92% of the capital and voting rights of Areva SA, directly or indirectly through the French Alternative Energies and Atomic Energy Commission.
This capital increase follows the fulfilment of preconditions set by the European Commission in its January decision to approve the restructuring of the Areva group. Those preconditions included the Commission approving the merger of EDF and New NP, and "favourable conclusions" from the French nuclear regulator, the Autorité de Sûreté Nucléaire (ASN), on the carbon segregation of the Areva-supplied reactor pressure vessel at Flamanville unit 3.
Areva said the purpose of this capital increase, "as a supplement to the income from asset sales in progress, is to enable Areva SA to meet its cash requirements and in particular to ensure the successful completion of the OL3 project".
Earlier this week, Mitsubishi Heavy Industries (MHI) and Assystem signed binding agreements with EDF to take equity stakes in New NP. Subject to approval by its board, MHI will take a stake of 15% - and potentially up to 19.5% - in New NP, while Assystem will take a 5% stake. Areva SA's board yesterday approved the signing of those agreements.
Areva said it has also initiated discussions with EDF on the conditions for implementing the European Commission decision requiring Areva to fully exit New NP by the end of the Areva restructuring plan, expected in 2019, at the latest.
The board of NewCo, which also met yesterday, decided to implement the share of the NewCo capital increase reserved for the French state. The capital increase in NewCo, totalling €3 billion, is to be carried out in two stages. In the first stage, the €2.5 billion capital increase reserved for the French state will now be carried out by 31 July. At the same time, €500 million - corresponding to the total amount that Japan Nuclear Fuel Limited (JNFL) and MHI have agreed to invest in NewCo - will be placed in trust. Once majority control of New NP has been sold to EDF - expected at the end of 2017 - the board will implement this €500 million capital increase.
Areva said the objective of the NewCo capital increases "is to enable it to meet its financial obligations and to develop, before being in a position in the medium term to refinance on the markets".
NewCo's board also proposed the appointment of current Areva CEO Philippe Knoche as CEO of NewCo. At the same time, the Areva SA board proposed the appointment of Philippe Soulié as its new CEO. These two appointments by decree will take effect once the NewCo capital increase has been completed, no later than 31 July. Areva said the composition of the boards of Areva SA and NewCo will be revised to reflect their new shareholder structures.
Researched and written
by World Nuclear News
