Constellation offers EDF its UniStar stake for $117 million

19 October 2010

Following Constellation Energy's decision to pull out of the US federal loan guarantee programme for Calvert Cliffs 3, relations with its 50:50 joint venture partner in new-build company UniStar, EDF, have soured.

On 15 October, EDF took the unusual step of publishing a letter to Constellation that offered to buy out Constellation's stake in UniStar, or for EDF to shoulder all of the risk of the project until construction begins.

In a publically-posted reply dated the same day, Constellation's chief operating officer Michael Wallace offered to sell the stake for $117 million, which he said was the cost of generic development and design costs for the EPR in the USA; compared with what he said was a total of $817 million invested by the two companies, and which he said was 'substantially below' the fair market value of UniStar.

EDF has not commented publicly about the matter since then.

In his earlier letter, EDF group executive vice president, finance Thomas Piquemal seemed particularly concerned that EDF might be contractually brushed off with Constellation coal plants, which it called "the threat of substantial disruption of the project that would result from Constellation's exercise of the option that it received from EDF in 2008 to put existing fossil fuel facilities to EDF for up to an aggregate of $2 billion." He went on to say that if Constellation were to exercise the put option, which EDF says is not 'exercisable under present circumstances', litigation would ensue. "If Constellation were nonetheless so imprudent and destructive as to attempt to exercise the put, EDF would vigorously and confidently resist its enforcement..."

In a prepared statement in immediate response, Constellation took a hard stand: "With respect to the separate matter of the put option, we will hold EDF to its stated commitment to stand fully behind its contractual obligations." Wallace's more detailed reply requested that this matter be discussed separately, so as not to "hold the prospect of Calvert Cliffs 3 hostage."

Finally, on 18 October, an EDF director on the Constellation Energy board of directors resigned. Daniel Camus will finish work on 21 October. EDF has nominated Samuel Minzberg, a partner in the Montreal law firm of Davies Ward Phillips & Vineberg LLP, as his replacement.


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