The electrician, in great financial difficulty, must be able to launch the new nuclear program.
Soon a new CEO and a sole shareholder. After having, on September 30, announced its choice to appoint Luc Rémont as CEO of EDF, the State published its simplified takeover bid on Tuesday for the 16% stake in the electrician still listed. The operation will cost 9.7 billion euros to the public accounts. The buyback price of the shares is set at 12 euros, a premium of 53% compared to the closing price on July 5, the day before Elisabeth Borne’s general policy speech announcing the renationalisation. In the absence of recourse, the opening of the offer is scheduled for November 10 and will run until December 8.
Competing interests
A range of reasons is pushing the government to regain full control over EDF. The operation will “to facilitate decision-making and the strategic management of the company”, slips the State in its takeover offer filed with the Financial Markets Authority (AMF). Gone is the headache of reconciling the executive’s energy policy objectives with respect for the particular interests of minority shareholders. Latest crisis to date, the contribution of the group to finance the tariff shield to the tune of more than 8 billion euros in 2022.
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This decision taken by the government in January 2022 placed EDF’s board of directors and management in an impossible position. It finally forced the group’s management to file an appeal against its ultra-majority shareholder – the State – with the Council of State to obtain compensation. In the absence of a challenge on their part, the managers risked being attacked by the minority shareholders for not defending the social interest of the company. The executive is also reluctant to extend this decision for 2023. If he renews it, he will however have a free hand, and a priori, less legal risk.
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Renationalization is all the more necessary since EDF is in a very poor state, financially speaking. Its debt, which exceeded 40 billion euros at the end of 2021, could exceed 60 billion this year. The electrician is facing a corrosion problem on emergency circuits at the heart of around ten reactors. A tile to 29 billion euros, while the group could have posted record results if its nuclear production had been there in this year of historic soaring electricity prices. “The renationalisation reinforces the credibility of the State’s support for EDF, in the context of the group’s operational difficulties”we explain to Bercy.
Without this ” support “, EDF would face a degradation of its rating by the agencies. However, the group must maintain a high quality rating in order to be able to borrow at low rates to launch the construction program for 6 EPR 2s, ordered last February by Emmanuel Macron. However, Bercy does not want to speak at this stage of recapitalization of the group. On the other hand, the 3 billion euro disposal plan announced in the spring by CEO Jean-Bernard Lévy has been confirmed. Unfortunately, there is little chance that this will be enough to redress EDF’s financial situation.
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The question of the reorganization of the group also seems to always arise. Admittedly, as the State states in its communication to the AMF, “the Hercule project, which focused in particular on the structure of EDF, is no longer relevant”, since it was buried in the summer of 2021. Reform of the electricity market, new regulation of existing nuclear power, financing and regulation of the future EPR 2 fleet, etc. “All of the projects awaiting EDF will however have to be discussed with the stakeholders, including the European Commission, and may have consequences for the strategy or organization of the group”we say in Bercy.
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