Shuffling Titanic Deck Chairs – EdF plus Areva = Trouble
The big announcement in the nuclear world means almost nothing. Electricity de France (EdF) is taking over Areva. EdF runs Frances fleet of nuclear reactors. Areva builds them. But since there is only one reactor under construction in all of France and no solid plans for more (in fact the country is moving rapidly away from nuclear, cutting it national nuclear fraction by 33% in the next 10 years). Areva instead tries to export them and builds them mostly in other countries.
But it does not try very successfully to complete them. The flagship Areva nuclear power plant worldwide is the troubled Gen 3 European Pressurized Reactor. There are 4 of them under construction globally. 2 in China, 1 in Finland and 1 in France. They are all late, they are all over budget, hugely so in France and Finland. Areva posting a US$5.3 billion dollar loss last year (which also resulted in S&P down grading it’s long term debt to junk bond status). The reactor vessel head failed its structural test by the highly independent French nuclear regulator, further delaying and perhaps even jeopardizing the native project.
EdF is the largest nuclear operator in the world. Areva is the largest nuclear construction company in the world. And they are both in trouble (tho Areva more than EdF). The reason it does not matter is both companies are 85% owned by the French government. Think Titanic deck chairs.
EDF said the acquisition of a 51 to 75 percent stake in the reactor business would have a neutral impact on its 2018 cash flow and it would be completely protected from any risks related to Areva’s long-delayed Olkiluoto 3 reactor in Finland, where Areva’s customer TVO is claiming billions of euros in damages.
Oh, i don’t think this is going to be that easy.