Chinese, Japanese, Kazakh firms in talks about Areva stake -source (updated)

CNNC International

22/11/2016 17:29

* Third-party investment needed so EU views govt support as 
legal 
    * Once deal done, Brussels could approve restructure by 
end-Dec 
    * Three-way investment would be for Areva's nuclear fuel 
business 
 
 (Adds detail and sources on EU clearance, capital increase, 
restructuring) 
    By Jean-Baptiste Vey and Geert De Clercq 
    PARIS, Nov 22 (Reuters) - Chinese, Kazakh and Japanese firms 
are in talks to invest in Areva  AREVA.PA , according to a 
French government source, a partnership deal that could help 
persuade regulators that a rescue plan for the nuclear group is 
not illegal state aid. 
    The source said talks are set to end in two to three weeks.  
    A second industrial source said that once the partnership 
investment deal is sealed, the European Commission will be ready 
to approve Areva's government-led restructuring by the end of 
December ahead of a planned 5 billion euro ($5.4 billion) mainly 
state-funded capital increase early next year.  
    French online news website BFM Business, citing sources 
close to the group, reported on Tuesday that China National 
Nuclear Corporation (CNNC), Mitsubishi Heavy Industries  7011.T  
and Kazakhstan's Kazatomprom were each set to buy an 11 percent 
stake in Areva. 
    Japan's MHI is a long-time Areva industrial partner with 
whom Areva is developing a new reactor model. Kazatomprom is a 
major uranium miner, with which Areva has a mining joint 
venture, while CNNC also has partnerships with Areva under which 
it may build a nuclear fuel recycling plant in China.  
    BFM reported that the three foreign investors would inject 
400 million euros each, that they would be able to chose board 
members, and that the French government's stake in Areva would 
fall to 67 percent. 
    Areva declined to comment on the BFM Business report.     
CNNC, Mitsubishi and Kazatomprom were not immediately available 
for comment. 
     
    EDF CONNECTION 
    The three-way investment would be for a one-third stake in 
Areva "NewCo", the as yet unnamed uranium mining and nuclear 
fuel business of Areva, which will be split off when the rest of 
the firm is absorbed by EDF  EDF.PA , the state power utility, 
under the rescue plan.  
    A major global player in the nuclear fuel industry, NewCo is 
set to get three billion euros of the five billion euro capital 
injection in order to repay debt and restore equity wiped out by 
years of losses. 
    The nuclear reactor building unit of the virtually bankrupt 
state-owned group, Areva NP, will be bought by fellow 
state-owned utility EDF for 2.5 billion euros, which signed a 
binding takeover deal last week.  urn:newsml:reuters.com:*:nL8N1DH1S5 
    A third part of Areva - Areva SA - will get a 2 billion euro 
capital increase and will hold the troubled Olkiluoto reactor 
construction project in Finland and other legacy activities that 
are earmarked for sale, including Areva's 50 percent state in 
Areva-Gamesa  GAM.MC  offshore wind joint venture Adwen, and 
Areva's military nuclear business.  
    BFM Business also reported that the state, which owns 87 
percent of Areva, would buy out Areva's current minority 
shareholders. 
    They include the Kuwait Investment Authority (which holds 
4.82 percent), EDF (2.24 percent), Areva staff (1.23 percent) 
and oil group Total (0.95 percent), according to ThomsonReuters 
data. Then the company would be delisted. 
    Once the three foreign investors sign the deal to buy their 
one-third stake in Newco, the European Commission is expected to 
give the green light for Areva's restructuring and capital 
increase in which the French state will contribute the lion's 
share.  
    Without the participation of third-party investors in the 
capital increase, the European Commission would qualify the 
injection of French state funds as illegal state aid. 
    A source familiar with the situation said the government 
hopes to get EU clearance for the deal at the latest before 
Christmas. 
    Areva chairman Philippe Varin is set to address a French 
parliament committee hearing on Wednesday.  
 
 (Reporting by Jean-Baptiste, Benjamin Mallet, Geert De Clercq 
and Maya Nikolaeva in Paris; David Stanway in Shanghai, and 
Timothy Kelly in Tokyo; Writing by Geert De Clercq; Editing by 
Andrew Callus and Alexandra Hudson) 
 ((maya.nikolaeva@thomsonreuters.com; +33 1 49 49 53 39; Reuters 
Messaging: maya.dyakina.thomsonreuters.com@reuters.com)) 
 
Keywords: AREVA RESTRUCTURING/