France to lead 4 bn euro injection for energy giant EDF
France announced on Friday it would lead a four billion euro capital increase for power company EDF, months after agreeing a similar cash injection for the other pillar of its nuclear industry, Areva. EDF, which is 85 per cent owned by the French state, also pledged to cut millions more in costs and sell off assets in a bid to reduce its huge pile of debt.
French electricity giant EDF has been hit by weak European electricity prices and hefty investments, notably its plans to help build Britain's controversial Hinkley Point nuclear plant at a projected cost of 23 billion euros. On Friday, the company again postponed its final decision on whether to continue with the project, in which the China General Nuclear Power Corporation is also a partner.
Chairman and CEO Jean-Bernard Levy told the board he would first consult with EDF's works council, as demanded by trade unions who have questioned the project's feasibility.
"EDF is a group that is already in debt -- increasingly in debt -- and it is vital that we bring this debt under control," Levy said in an interview with France's Le Figaro newspaper.
After hours of talks, the board gave the green light to raising four billion euros of capital through a "market operation" to be carried out by the beginning of next year.
Paris will inject three billion euros. In exchange, EDF will redouble its debt-cutting efforts, targeting cost reductions of at least a billion euros in 2019 compared to 2015 -- well above original plans for 700 million euros of savings over three years.
The group also plans to raise 10 billion euros from selling off gas, coal and oil interests.
The measures are designed to help EDF better plan for the future, including paying for the maintenance of 58 French reactors and its takeover of the reactor arm of struggling nuclear giant Areva.
Unions, financial markets and even EDF's former finance chief, who resigned in March, have for months cast doubts on the company's ability to handle all its investments, particularly Hinkley Point.
- with AFP
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