A long-expected re-shuffling of the French nuclear power industry became formal on Wednesday, as state-owned utility Electricite de France (EDF) and nuclear service, component manufacturer and construction giant AREVA signed a binding agreement valued at $2.67 billion for the sale of AREVA NP's activities.
The sale is complicated by projects underway and standing contracts that include guarantees overshadowed by controversy. As such, the deal signed 15 November includes major contingencies. The contract “sets the terms for the sale of an interest conferring exclusive control by EDF of an entity (“New NP”), a 100 percent subsidiary of AREVA NP that will complete AREVA Group's activities relating to design and equipment manufacturing of nuclear reactor and fuel design and assemblies manufacturing and services to the nuclear installed base,” the companies announced.
The contracts for the European Pressurized Reactor Olkiluoto 3 project in Finland and the resources required to complete the project, as well as certain contracts relating to components forged in Le Creusot plant will remain within AREVA NP, in AREVA SA's scope.
The exceptions are related to the controversial discovery of high carbon concentrations in steel used in various components associated with the Le Creusot forge that are in place at ongoing AREVA projects. “Contractual obligations related to the discovery of anomalies in the quality inspection of equipment manufactured at the Le Creusot plant and, if need be, the Saint Marcel and Jeumont plants, will remain guaranteed by AREVA SA,” the announcement says.
“The sale price for 100 percent of the equity value of NEW NP is confirmed at 2.5 billion euros ($2.67 billion), excluding the potential price complements and adjustments and and are with no transfer of financial debt at the closing date,” which is expected in the second half of 2017.
The deal is subject to obtaining a favorable conclusion from the French nuclear regulator, ASN, regarding the outcome of tests on the primary circuit of the Flamanville Unit 3 reactor, complete and satisfactory conclusions of the quality audits at the forges and plants named and approval from the relevant regulatory agencies.
EDF Chairman and Chief Executive Officer Jean-Bernard Levy called the signatures on the contracts “a major step forward in the refounding of the French nuclear industry.” In turn, AREVA Group CEO Philippe Knoche said the company was “delighted with these agreements.”
“The conclusion of these agreements strengthen our resolve to continue implementation of our action plan,” Knoche said.