Areva SA, the largest supplier of nuclear reactors, increased € 900 million ($ 1.2 million) in a stock sale, bringing in a sovereign wealth fund, Kuwait, alongside the French state to help finance investments.
Kuwait Investment Authority is offering to buy 600 million new shares, giving 4.8 percent of the company based in Paris, the French Finance Ministry said today in a statement. The state, which owns 91 percent of Areva, will buy another 300 million euros of new shares.
France has been in talks for a year to sell up to 15 percent of the company in Kuwait, Japan's Mitsubishi Heavy Industries Ltd. and Qatar's sovereign wealth fund. Areva CEO Anne Lauvergeon had aimed to raise 3 billion euros in the capital to help finance spending on equipment, plants and uranium mines to fend off competition and sell more reactors and fuel in Europe, China and India .
"When the time comes, the state and Areva will consider new funding measures to complement this first capital increase, if necessary," the ministry said. Areva is still in talks to sell its stake in STMicroelectronics NV to a French government agency said.
The ministry did not say if talks with Qatar and Mitsubishi continues. Industry Minister Eric Besson, said last week that France and Qatar there was agreement on a valuation of Areva. Patrick Kron, chairman of France, the power equipment maker Alstom SA, last month objected to its rival Mitsubishi taking a stake in Areva.
Sliding objective
Achieving the original goal of a 15 percent equity in late 2010, now seems unlikely, Eric Sharper, industry analyst at Credit Agricole in Paris, said in a note.
"We do not consider this to be a major problem at the moment, given expected capital raising in 2011 and the possibility of the participation of more selling," he said curtly.
French state-controlled power utility, Electricite de France SA owns 2.4 percent of Areva. Fed may increase its stake in the maker of reactors, the government said in July. Areva mining unit can form partnerships, he said.
Lauvergeon, whose term as director general expires in June, is trying to keep EDF, Areva's largest customer, to increase the holding to a point in winning a board representation. A seat for the EDF can deter competitors from the power company to do business with Areva, Lauvergeon said last month.
Seed from EDF
Both companies blamed each other for the loss of a contract to build four nuclear plants in the United Arab Emirates to a group of Korea last year, and have discussed the nuclear fuel enrichment and recycling orders in recent months , forcing the government to step in.
About 4 percent of Areva's operations in the Paris stock exchange and investment certificates without voting rights. Operations are suspended. They have risen 0.7 percent this year, giving the company a market value of 12.5 million euros.
The French government aims to list shares in Areva to the end of the first half of 2011.
Areva, whose finances have been affected by the extra costs of building a reactor in Finland, has already raised € 5,200,000,000 in 2009 and 2010 for the sale of its network power, and interests in Safran SA, GDF Suez SA, Total SA and interests of other minorities. It also has sold bonds € 3750000000 since September 2009.
S & P cut
Areva rating Standard & Poor's downgraded the debt on 28 June two steps to BBB + investment grade third lowest, saying the manufacturer's finances were strained by delays and cost overruns on nuclear plant construction in Finland. The company has taken € 2600000000 of tariffs in the contract of 3 million euros since 2005.
Areva debt includes € 2 million is earmarked for the purchase of the participation of Siemens AG's 34 percent joint venture in January 2012 reactor. Headquartered in Munich, Siemens uses an option to exit the business last year after agreeing to an alliance with rival Russian Rosatom Corp.
"Areva is consuming a large amount of cash flow," said Pierre Boucheny, a Paris-based analyst with Kepler Capital Markets, in a telephone interview. "We must avoid further slippage in Finland." Evaluation of the French company is also retained by litigation against both Siemens upon completion of your business and customer Teollisuuden Voima Oy Finnish overruns on the project is also a weight, Boucheny said.
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