Green light for Areva restructuring

8 February 2017

Areva shareholders at a meeting on 3 February authorised a €2bn ($2.1bn) capital increase by means of an ordinary share issue reserved for the French state.

Shareholders also said they favoured the group’s asset disposal plan, including the sale of its nuclear reactor operations to EDF. Areva, which is 86.5% owned by the French state, will instead focus its activities on the nuclear fuel cycle. A state-sanctioned capital increase of €5bn is being divided into €2bn for Areva and €3bn for nuclear fuel group NewCo, which is being split from Areva as part of the government-led rescue.

The state will fund €2.5bn of the NewCo capital increase with Japan Nuclear Fuel Limited (JNFL) and Mitsubishi Heavy Industries (MHI) taking a combined 10% stake (5% each) for €500m. The NewCo capital increase was also approved at the meeting. The agreement with JNLF and MHI will be finalised after EDF has taken control of Areva’s reactor business, Areva said. MHI said today that in addition to investing in NewCo, it has been in discussions "toward making a similar minority stake investment in Areva NP", Areva's reactor unit.

EDF agreed in July 2015 to take a stake of 51-75% in Areva NP in a government-backed plan to revitalise France's nuclear power industry. Strategic investors will be able to take minority stakes in the business. In April 2016, France notified the European Commission (EC) of a restructuring plan to restore the competitiveness of Areva, which had made losses for the past five years. In January European Union (EU) anti-trust regulators cleared the French government’s restructuring of Areva. The EC said French plans to grant the capital injection were in line with EU state aid rules.

Negotiations with JNFL and MHI are continuing to finalise the documentation, Areva said. "The capital of NewCo remains open to other strategic investors for investment within the same framework as the agreements currently being finalised." Areva began the process of splitting off its nuclear fuel cycle activities into NewCo in August 2016, combining the Areva Mines, Areva NC, Areva Projects and Areva Business Support companies and their respective subsidiaries.

In 1991, Areva and MHI formed a joint venture in the nuclear fuel cycle business, and in 2006 they concluded an agreement on broader collaboration in the field of nuclear energy. That agreement led to the creation in 2007 of the Atmea 50-50 joint venture, set up to develop, market, license and sell the 1100 MWe Atmea-1 pressurised water reactor combining both companies' technologies.

In June 2016, EDF and MHI signed a memorandum of understanding (MOU) for collaboration in civil nuclear power, including MHI taking a stake in Areva NP and joint development of the Atmea reactor design. The MOU also covered a "potential broader range of collaborative ties leveraging the respective technologies and special expertise in the global market."

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