The French government offered to pay about 9.7 billion euros (US$9.93 billion) to fully nationalize Electricite de France SA (EDF) as it seeks to resolve problems at the power generator that are exacerbating Europe’s energy crisis.
The state will offer 12 euros a share to acquire the 16 percent of EDF it does not already own, the French Ministry of Finance said in a statement yesterday.
That is a premium of 53 percent to the closing value of 7.84 euros for EDF shares on July 5, the day before French Prime Minister Elisabeth Borne announced the nationalization.
Photo: Reuters
The offer would be submitted to Autorite des Marches Financiers by early September, with the aim of closing the process by the middle of October, the French Ministry of Finance said.
Shares of the company, which had been suspended since Wednesday last week pending details of the plan, jumped 15 percent to 11.78 euros as of 10:17am yesterday in Paris.
“We think the offer looks attractive and has high probability of success,” Citigroup Inc analyst Piotr Dzieciolowski said in a note.
In the midst of Europe’s worst energy crisis in a generation, France wants to take debt-laden EDF back into full state ownership to keep households’ electricity bills in check while making massive investments to reduce the nation’s dependence on imported fossil fuels.
The French state is best placed to carry out the decades-long investment program required to meet these goals, a finance ministry official told reporters yesterday.
In a revised 2022 budget that is to be presented to parliament later this week, the state would request 12.7 billion euros of credits to cover the EDF nationalization and other possible operations in the coming months and years, the official said.
The utility’s existing reactors are suffering from worsening reliability, while the construction of new facilities has been stymied by delays and cost overruns. This poor performance, combined with a government-imposed electricity price cap, has made EDF’s debt burden look increasingly unsustainable.
The nationalization might reassure EDF’s creditors about the company’s financial stability, but it would leave many other challenges for the successor of chairman and CEO Jean-Bernard Levy, who is to step down as soon as September.
Holders of the company’s convertible debt would be offered 15.64 euros for each bond, the statement said.
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