EDF shares dropped more than 11pc on Monday as investors reacted to its plan to sell 4bn euros (£3bn) of new shares to help it finance the building of the Hinkley Point nuclear plant. The French energy giant, which is 85pc-owned by the French state, announced the plans for a rights issue as well as further cost-cutting measures after the market closed on Friday night. The French Government has indicated it will subscribe to 3bn euros of new shares through the rights issue as well as taking a scrip dividend option for 2016 and 2017, so diluting the value of existing shareholdings. EDF has been forced to shore up its finances as it is hit by increasing exposure to falling wholesale electricity prices, at the same time as it tries to afford its share of the £18bn nuclear plant in Somerset and upgrades to the existing French nuclear fleet. As well as the rights issue, EDF said it planned to sell 10bn euros of assets by 2020, including a stake in French power-grid operator RTE, and deepen planned operational spending cuts from 700m to 1bn euros by 2019. Analysts at Jefferies said: “Execution of the new plan will buy EDF time with the credit rating agencies, allowing it to maintain solid investment grade rating till 2018. “However, for this to be the case in the long term, a recovery in power prices is essential. Also, the new plan is likely to result in painful earnings dilution.”
Telegraph 25th April 2016 read more »
Electricite de France SA dropped the most in seven weeks in Paris trading after announcing plans to sell about 4 billion euros ($4.5 billion) of new shares and deepen cost cuts. EDF sank as much as 8.6 percent, the biggest intraday decline since March 7, and the most among companies on the Euro Stoxx Utilities Index. The utility is seeking to bolster its finances as it studies whether to move forward with a controversial nuclear power plant project in the U.K. On top of the stock sale, EDF will sell 10 billion euros of assets, including a stake in French power-grid operator RTE, by 2020, and deepen planned spending cuts to 1 billion euros by 2019, according to an April 22 statement.
Bloomberg 25th April 2016 read more »
During its meeting held on 22 April 2016, EDF’s Board of Directors reviewed the Group’s long term financial trajectory under the new adverse market price conditions. A responsible, efficient electricity producer that champions low carbon growth, EDF Group’ ambitions are consistent with its CAP 2030 strategy priorities: Proximity to customers and local communities; Low carbon generation, with a balanced mix of nuclear and renewable energy; International expansion. An action plan was presented to the Board of Directors which includes: Net investments (excluding Linky and excluding new developments) optimised by close to €2bn in 2018 compared to 2015. Net investments should reach €10.5bn in 2018. ; A reduction in operational expenditures of at least €1bn in 2019 compared to 2015; An assets disposals plan of c. €10bn by the 2020 horizon.
EDF 22nd April 2016 read more »
Will EDF rescue plan be enough? The €18bn gains listed (in the plan) also compare unfavourably both to the €23bn (£18bn) overnight cost of the Hinkley Point C proposal, albeit spread over ten years, and the EDF debt pile of €37bn, which isn’t getting smaller.
Mark Johnston 26th April 2016 read more »