French state to pump 3 bn euros into EDF

Jul 26, 2016 12:00 AM

France will pump 3 billion euros into state-controlled electricity company EDF, shareholders decided Tuesday, two days before it is expected to give the final green light to the controversial construction of two nuclear reactors in Britain.

At an extraordinary meeting, shareholders approved a 4-billion increase in share capital, of which the French state, which owns 85 percent of EDF, is to pay 3 billion.

Plans for the share issue was first announced in April, and should take place later this year.

"The increase in capital will reinforce the company's own funds ... to cope with all of the essential investments that need to be made," chief executive Jean-Bernard Levy told shareholders.

Saddled with 37.4 billion euros in debt at the end of last year, Levy acknowledged that the company's "financial trajectory is taut" given the fall in energy prices.

He said the added capital would help the company protect its credit rating and ability to refinance its debt at affordable rates.

EDF must soon step up renovations to extend the life of its 58 nuclear reactors in France, which is expected cost it around 51 billion euros.

On Thursday, the company's board of directors is expected to give the final investment approval for building two EPR reactors at Hinkley Point power station in southwestern England.

A joint project between EDF and China General Nuclear Power Corporation, the Hinkley Point project is one of the world's most costly nuclear power plant projects and carried a projected price tag of Euro18 billion before Brexit lowered the value of the pound.

EDF's chief financial office resigned over the threat the project represents to the company's finances and unions have waged a battle in court to try to delay its approval.

Construction of European Pressurised Reactors (EPR), a third-generation nuclear power plant design considered the most advanced and safest in the world, has been plagued with delays and overruns.

EDF has had to push back the launch of its first EPR in Normandy to late 2018 at the earliest, while the delays and overruns to its EPR projects helped drive French nuclear firm into a state rescue and breakup.

EDF is due to take a majority stake in Areva's nuclear power plant business.

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