EDF Shares Fall 11% on Radical Refinancing
French power giant EDF plans to sell €10bn of assets between 2015 and 2020, including reducing its equity stake in French power grid operator RTE, selling off thermal power generation assets outside France, and divesting minority stakes.
The announcement was made at the conclusion of its board meeting late April 22. It also flagged its intention of reducing operational spending by at least €1bn in 2019, relative to 2015, and of raising €4bn by selling new shares in an attempt to raise funds to build the Hinkley Point C nuclear power plant in southwest England.
EDF will now make a final investment decision on the Hinkley Point nuclear reactor in September, France's economy minister Emmanuel Macron told French newspaper Journal du Dimanche in an interview published on April 24. The decision had been due to be taken next month. EDF is 85%-owned by the state and Macron also indicated that the state would subscribe for €3bn of the new shares.
Macron was asked if renouncing the £18bn Hinkley Point C project would enable EDF to avoid the new share issue, but his reply was "In no way. The investment in the two [new] Hinkley Point reactors represents the equivalent of one year's investment to EDF."
However markets were unconvinced by his or the company's assurances, and EDF share prices closed April 25 at €10.88 per share, 11% lower than the close on April 22. The company's restructuring was announced after markets closed on April 22. EDF has already had to replace its finance chief, after Thomas Piquemal resigned last month because of his unease over financing Hinkley Point C.
In the UK, where Hinkley Point C if built is unlikely to enter service now before 2025, EDF's UK subsidiary said that scheduled closure dates for its Heysham 1 and Hartlepool nuclear plants had been extended by five years to 2024, and closure dates for its Heysham 2 and Torness reactors had been extended by 7 years to 2030.
A quarter of EDF's installed 136.2 GW capacity worldwide in 2014 was fossil-fuel -- that broke down as 16% coal and oil-fired, 9% gas-fired. That total includes France where EDF is not proposing to divest all thermal power plants. However it was the No.1 foreign generator in Poland with 13.8 TWh generated and earlier this year announced it was divesting all its plants there.
In the UK, it owns 2 GW of ageing coal fired capacity in the East Midlands and the 'West Burton A' 1.33 GW combined cycle gas-fired power plant which opened just three years ago. It also has thermal power plants in China and elsewhere globally.
Fifty-four percent of EDF's 136.2 GW generation capacity in 2014 was nuclear, followed by 21% renewable including hydro.
Mark Smedley