European Union (EU) anti-trust regulators on 20 July launched an investigation into the restructuring of the French state-owned nuclear engineering company Areva. The investigation will "determine whether the French state's contribution to the financing of the Areva group's restructuring gave the company an unfair advantage not available to its competitors within the meaning of the EU rules on state aid”, a European Commission (EC) statement said.
Areva, which is 87% state-owned, has faced severe difficulties since the 2011 Fukushima disaster in Japan, which were compounded by construction problems affecting its first EPR reactor in Finland, now nine years behind schedule and significantly over budget. In April, France notified the EC of a major restructuring plan to save the company, including a €4bn ($4.4bn) injection of public funds. The plan also included a proposal to divest major units of the company, including Areva's reactor unit to Electricite de France (EDF) and Japan's Mitsubishi Heavy Industries (MHI).
"Given the size and importance of the restructuring of Areva, the Commission has to carefully assess that the restructuring plan is sound and that the state aid does not unduly distort competition in the Single Market," said EU Competition Commissioner Margrethe Vestager in a statement. "Our aim is to ensure a sustainable future for Areva without the need for further government support," she added.
EDF, also majority state-owned, agreed in June 2015 to purchase between 51% and 75% of reactor business Areva NP at a valuation of around €2.7bn, with the deal expected to be finalised in 2017. The French government has already invested in billions euros to keep Areva afloat and thousands of French workers on the payroll.
Areva, which is also involved in uranium mining and fuel processing, plans to create a new group later this year that will bring together all its fuel cycle operations. CEO Philippe Knoche said the new company, temporarily named 'New Co', would handle the business of nuclear fuel for power plants, which includes mining, conversion and enrichment operations, as well as the processes of recycling, logistics and dismantling. New Co would take on part of Areva's debts along with its assets, and would also be able to raise capital from the markets in the medium term, by 2019 or 2020, because it would be "an attractive company" for new investors, Knoche said.
According to European guidelines on state aid for rescuing and restructuring companies in difficulty, aid to rescue such firms can only be granted for up to six months. Aid must then either be reimbursed or a restructuring plan must be approved by the. The plan must ensure that the long-term viability of a company is restored without further state support, that the distortions of competition induced by the state aid are addressed by specific measures and that the company contributes to the cost of restructuring. Restructuring aid may only be granted once over a period of 10 years.