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Fri 10 Dec 2010 04:49 PM

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Areva gets cash injection from Kuwait, France

KIA to take $795.3m stake in Areva, or 4.8 percent, as part of a capital increase

Areva gets cash injection from Kuwait, France
Arevas investment certificates were suspended from trading after the company announced its board meeting

Areva looked set to finalise the first leg of a long awaited fundraising, after France and Kuwait agreed to inject $1.19 billion into the French nuclear group.

Kuwait's sovereign wealth fund KIA (Kuwait Investment Authority) is to take a $795.3 million stake in Areva, or 4.8 percent, as part of a capital increase that will also see the French state invest 300 million euros, economy minister Christine Lagarde said in a statement on Friday.

Lagarde also set a target of June next year for a full stock market listing of Areva. The French state currently owns just over 90 percent of the company, which trades on the Paris bourse in the form of investment certificates representing 4.03 percent of its capital.

In total, Areva hopes to raise 3 billion euros through the capital increase as part of efforts to find some 12 billion euros by 2012 to fund its expansion and research and development into a new generation of nuclear power plants. A second phase could come within three to six months.

Lagarde said: "These proposals from KIA and the state will be examined on December 11 by the (Areva) supervisory board." Areva earlier said its supervisory board would meet on Saturday at 0900 GMT.

Areva's investment certificates were suspended from trading after the company announced its board meeting.

Lagarde said the deal with KIA valued Areva's equity at 11.5 billion euros, which an analyst said represented 325 euros per Areva certificate. That is at a 7 percent discount to the certificate's closing price of 351 euros on Thursday, but higher than some analysts had expected.

An analyst who asked not to be named said: "This is a good price. There have been rumours recently that it would be 200 euros per certificate."

Areva's supervisory board meeting on Saturday comes after months of talks plagued by political and industrial setbacks, and will lay out the first phase of the capital hike.

The second phase could take place within three to six months and involve industrial investors Mitsubishi Heavy Industries, engineering group Alstom and utility EDF, several sources have told Reuters.

But sources close to the matter said Mitsubishi Heavy Industries, a rival of French group Alstom, may end up not taking part in the capital increase.

One source told Reuters: "Mitsubishi was supposed to be part of the first round and we end up with the French state investing in lieu of Mitsubishi just to keep Alstom happy."

Areva has already sold its power transmission and distribution business (T&D) to Alstom and electric equipment company Schneider Electric for 4.1 billion euros.

It also raised one billion euros by selling its stakes in oil major Total and French utility GDF Suez, and sold its stake in French defense group Safran for a reported 600 million euros. (Reuters)

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