Oct. 2 (Bloomberg) -- Electricite de France SA, Europe’s biggest power generator, hired Barclays Capital and Deutsche Bank AG to advise on the sale of its U.K. power distribution business for more than 4 billion euros ($5.8 billion).

The sale may take place in the first quarter and the Paris- based utility isn’t currently in “advanced” talks with any buyers, Chief Financial Officer Daniel Camus said today on a conference call. BNP Paribas will also provide support.

“The network is of good quality and we will get a lot of interest,” Camus said. “We regularly get spontaneous shows of interest but nothing formal. The formal process starts today.”

The move is part of a plan to cut net financial debt by at least 5 billion euros by the end of 2010, EDF said. Chief Executive Officer Pierre Gadonneix, whose mandate expires in November, said the sale would make a “significant” contribution to meeting the debt reduction target.

EDF agreed to buy British Energy for 12.5 billion pounds a year ago. The utility gained control of eight nuclear plants with 15 reactors in the U.K. and said it planned to develop four Evolutionary Power Reactors on two sites. The state-controlled company is developing new-generation reactors in Flamanville, Normandy, at an estimated cost of 4 billion euros, as well as China and has plans for plants in the U.S.

Shares Drop

EDF fell as much as 2.2 percent and traded down 85 cents at 38.78 euros as of 2:38 p.m. in Paris. The shares have dropped 6.5 percent this year.

The power network sale and the agreed sale to Centrica Plc of a 20 percent stake in British Energy will cut the initial cost of the British Energy acquisition by half, Camus said.

EDF at the end of 2008 valued the regulated part of the U.K. network at about 4 billion euros, Camus said. “We’re expecting a sale price that would be optimized and certainly higher than this” when taking into account the non-regulated aspect of the business, he said.

The business is worth about 4.9 billion euros, Citigroup analyst Sofia Savvantidou wrote in a note today. “We believe the asset should be easy to sell and expect interest both from trade buyers and infrastructure, private equity groups.”

15 Million People

The U.K. network, which covers London and the southeast and east of England, serves about 15 million people, handling about 90 terawatt hours of power, or about 28 percent of the total distributed in the country, EDF said. EDF invested 530 million pounds last year in the network, according to its annual report. The 29,000 square-kilometer network includes 47,000 kilometers overhead power lines and 135,000 kilometers underground.

U.K. network operators need to invest 6.5 billion pounds over the next five years to replace infrastructure and connect renewable energy, under proposals from market regulator Ofgem in August. The regulator sets controls on investment and income for the regional energy network monopolies, aiming for a balance between secure supplies and low consumer prices. The final decision on investments will be released later this year.

EDF’s Ambition

Potential buyers of the U.K. distribution business include Abu Dhabi Investment Authority, Cheung Kong Infrastructure Holdings Ltd., and the Ontario Teachers’ Pension Plan and Canadian Pension Plan, the Sunday Times reported on Aug. 16. Scottish & Southern Energy Plc, National Grid Plc and Morgan Stanley Infrastructure are also “holding talks,” the newspaper said at the time.

“This operation will give us the means to carry out” EDF’s ambition of developing four new-generation nuclear reactors in the U.K., Gadonneix said. There are still plans for more partnerships in the U.K. to develop the reactors, he said.

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Last Updated: October 2, 2009 09:12 EDT