France said it’s in “active” talks with the Kuwait Investment Authority about selling a stake in nuclear reactor maker Areva and discussions with other potential investors are less advanced.
French Finance Minister Christine Lagarde told journalists today in Paris: “Negotiations in the short term are actively continuing with Kuwait Investment Authority. We also have other investors who are interested with whom negotiations will continue over a slightly longer period.”
The French government, which owns 91 percent of Areva has been in talks to sell up to 15 percent of the company to Mitsubishi Heavy Industries Ltd and the sovereign funds of Qatar and Kuwait. Areva Chief Executive Officer Anne Lauvergeon has been pushing for a capital increase to help fund spending on equipment, plants and uranium mines to fend off competition and sell more reactors and fuel in Europe, China and India.
Having already postponed Paris based Areva’s share sale from the first half as it reviewed company strategy, the French government said on July 27 that it planned to proceed with a capital increase by year end. It also said state controlled power utility EDF SA may increase its stake in Areva, and that Areva’s mining unit may form partnerships.
Lagarde said today: “We must not be in a hurry. We must make a good decision, at a right price with an appropriate partner.”
The French state itself plans on subscribing to the share sale. Options for contributing government capital may include a share purchase by France’s Strategic Investment Fund.
The Strategic Investment Fund has already proposed buying Areva’s 14 percent of semi conductor maker STMicroelectronics for about $919 million, Les Echos newspaper reported today, without saying where it obtained the information. The stake is currently worth about $1.1 billion, according to Bloomberg data.
French Industry Minister Eric Besson said talks with the Qatar sovereign fund about investment in Areva haven’t ended. The French government and the fund haven’t yet been able to agree on the company’s valuation, Besson said.
About 4 percent of Areva trades on the Paris stock exchange as non voting investment certificates. They have dropped 7.3 percent so far this year, giving the company a market value of $14.8 billion.
The company, whose finances have been hurt by construction cost overruns at a reactor in Finland, has been selling bonds, its power grid unit, and stakes in Safran, GDF Suez and Total in recent months to fund its investments.
Standard & Poor’s cut Areva’s debt rating on June 28, saying that its finances were strained by delays and cost overruns at the facility in Finland and that profit could be hurt by a dispute with EDF over a nuclear fuel enrichment plant.
EDF, France’s state controlled power company, owns 2.4 percent of Areva. Lauvergeon is trying to prevent the utility from raising its stake to a point where it gains a board seat. If the company takes a seat, it may deter rivals of EDF from doing business with Areva, Lauvergeon said last month.
Lauvergeon also said that Tokyo based Mitsubishi gaining a stake of about 2 percent in Areva would be “symbolically strong,” as the two companies cooperate on selling reactors.
A deal with Mitsubishi wouldn’t prevent Areva and Alstom from selling reactors and turbines together, Lauvergeon said. She was responding to Alstom CEO Patrick Kron, who said November 4 that Mitsubishi taking a stake would mark a “major” drawback as the French and Japanese companies compete on turbines.
The French government would welcome Mitsubishi purchasing a stake in Areva, Prime Minister Francois Fillon said July 16 in Tokyo.
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