EDF Said at Odds With French State on Plan to Finance Hinkleyby and
EDF said to work on other solutions to limit credit rating cut
EDF said to plan board meeting on Hinkley Point at end April
Electricite de France SA and the French government are at odds over a financial deal that would allow the state-owned utility to give the final go-ahead next month to a 18 billion-pound ($25.5 billion) nuclear plant in the U.K.
The government, which owns 85 percent of EDF, is resisting the company’s demand for a share sale to raise capital, arguing it has no immediate liquidity issues, said three people, who asked not to be named because the discussion isn’t public.
For its part, the government is ready to take EDF’s dividend in shares rather than cash this year and next, two of the people said. The company, which wants to limit any credit rating downgrade to two levels, is also seeking additional savings and preparing asset sales, one of them said. These costs cuts may reach 1 billion euros ($1.1 billion) by 2018 and would be on top of 750 million euros already announced, French newspaper Le Figaro reported on Friday, without saying where it got the information.
EDF spokeswoman declined to comment. A spokeswoman at the Economy Ministry couldn’t immediately be reached for comment.
EDF labor unions have been calling for the company to delay its project to build two atomic reactors with a Chinese partner at Hinkley Point in the U.K., saying it’s too risky at a time when falling power prices undermine earnings. French Economy Minister Emmanuel Macron, who backs the project, said last month the government will re-capitalize the company if needed, after EDF’s chief financial officer resigned over concerns the project would put too much strain on the group’s finances.
Macron and EDF Chief Executive Officer Jean-Bernard Levy, who are due to meet today, have pledged to come up with a plan to shore up the finances of the state-controlled company by early May, saying the utility would risk losing the U.K. contract that’s key for the French nuclear industry if it were to ask for a postponement.
To secure the project, the U.K. government has guaranteed that EDF will earn at least 92.50 pounds a megawatt-hour over a period of 35 years at Hinkley Point, saying it will create 25,000 jobs and help meet a pledge to trim carbon dioxide emissions.
EDF may hold a board meeting around April 22 to look into its financial plan, assuming that it’s reached an agreement with the French government, two of the people said. It would hold another board meeting at the end of the month or early May to vote on the final investment decision for Hinkley Point, the people added.