France struggles to save AREVA from bankruptcy

Indebted French nuclear company Areva sacks workers, negotiates with Paris, Financial Review, 10 May 15 French nuclear group’s options narrow; Talks with EDF and state over costs of shake-up by Michael Stothard French nuclear group Areva is to cut 6,000 jobs over three years – 14 per cent of its global workforce – as options for a government-backed rescue package begin to narrow. Areva, which reported a €4.8bn loss last year, said it was also lowering wages for surviving staff in an attempt to deliver the bulk of a €1bn cost reduction target.

However, the state-controlled group, which has seen its equity capital fall to nearly zero after four years of losses, is continuing to negotiate a more radical restructuring plan with EDF and the French government.

People close to the discussions said that these talks now focus on just two remaining options, and a final decision will be made in the coming months.

Under the first option, EDF, which is 85 per cent government owned, would acquire the nuclear reactor and engineering businesses of Areva, taking control of the process of designing and building new reactors as well as maintaining existing plants. This deal, which could be valued at as much as €3bn, would result in the break-up of Areva, a company once regarded as one of the crown jewels of France’s nuclear industry. But, at the same time, it would limit the amount of cash the state has to contribute to Areva in a capital raising, which is expected to accompany such a deal.

Under a second, simpler, option – which people close to the talks say is preferred by the managements of Areva and EDF – only the smaller engineering business of Areva would be sold to EDF.This would keep Areva relatively intact. But with EDF paying only between €300m and €1bn, it would necessitate a much bigger capital contribution from the cash-strapped French government to Areva.

Both deals would require all parties to agree a deal on price, which has been a contentious issue in recent weeks. To help mitigate the cost to the state of any capital raising, Areva will consider approaching its existing Chinese partners, according to people familiar with the plans………http://www.afr.com/news/world/indebted-french-nuclear-company-areva-sacks-workers-negotiates-with-paris-20150510-ggy6b0