Agreements signed by Areva with Japan Nuclear Fuels Ltd (JNFL) and Mitsubishi Heavy Industries (MHI) for their equity investment in NewCo took effect on 21 March.
NewCo is the temporary name of the entity which combines all of the operations of Areva related to the nuclear fuel cycle, whose legal name is New Areva Holding. The reactor business of Areva is in the process of being transferred to Electricite de France (EDF) subject to conditions put in place by the European Commission (EC). The EC ruled in January that plans to grant a capital injection of €4.5bn to Areva are in line with EU state aid rules and that Areva's restructuring plan will allow the company to become viable without unduly distorting competition.
The payment of the state aid is subject to conditions, in particular a positive conclusion of tests on the nuclear safety agency Autorité de Sûreté Nucléaire concerning the reactor pressure vessel of the EPR under construction at unit 3 of the Flamanville NPP, and approval of the divestment of Areva's reactor business under EU merger rules. EC guidelines on the rescue and restructuring of non-financial companies require beneficiaries to have a sound realistic restructuring plan that will achieve long-term viability to ensure that they do not continue to seek public aid. The plan must include measures to limit distortions of competition, and the beneficiary must also make a significant contribution to the costs of restructuring.
The investments by JNFL and MHI, amounting to 5% of the capital of NewCo for each of the partners, equate to an individual investment of €250m ($269m), giving an aggregate investment of €500m. This forms part of NewCo’s overall restructuring plan, which includes capital increases of €3bn in two stages. First, once preconditions set out in the EC decision are satisfied, the French State will subscribe to a first reserved capital increase for an amount of €2.5bn, and the co-investors will set aside $500m in a Trust. Second, once the majority control of New NP has been transferred to EDF and once other customary regulatory preconditions have been satisfied, then JNFL and MHI will subscribe to a second reserved capital increase of €500m through release of the funds invested in the Trust.
Beyond the stakeholder relationship, NewCo has strong industrial relationships with JNFL and MHI in the fuel cycle. JNFL and NewCo have stakes in enhanced cooperation, and notably support for the smooth startup and stable operation of the Rokkasho reprocessing and MOX plants in Japan. NewCo also provides maintenance and operations support for MHI.