Kuwait aims to buy 4.8% Areva stake

Paris: Areva, the biggest supplier of nuclear reactors, will raise €900 million (Dh4.36 billion) in a share sale, bringing in a Kuwaiti sovereign wealth fund alongside the French state to help finance investments.

Kuwait Investment Auth-ority is offering to buy €600 million of new shares, giving it about 4.8 per cent of the Paris-based company, the French Finance Ministry said yesterday in a statement.

The state, which owns 91 per cent of Areva, will purchase an additional €300 million of new stock.

France has been in talks for about a year to sell as much as 15 per cent of the company to Kuwait, Japan's Mitsubishi Heavy Industries Ltd and the sovereign fund of Qatar.

Areva Chief Executive Officer Anne Lauvergeon had aimed to raise €3 billion in the capital increase to help fund spending on equipment, plants and uranium mines to fend off competition and sell more reactors and fuel in Europe, China and India.

"When the time comes, the state and Areva will consider new financing measures to complement this first capital increase, if need be," the ministry said. Areva is still in talks to sell its stake in STMicroelectronics NV to a French government entity, it added.

The ministry didn't say whether talks with Qatar and Mitsubishi are continuing. Industry Minister Eric Besson said last week that France and Qatar had failed to agree on a valuation for Areva. Patrick Kron, the CEO of French power-equipment maker Alstom, last month expressed opposition to rival Mitsubishi taking a stake in Areva.

Target to Slip

Achieving the original target of a 15 per cent capital increase by the end of 2010 now seems unlikely, Eric Sharper, an industrials analyst at Credit Agricole in Paris, said in a note.

"We do not consider this to be a big issue for now, given expected capital raising in 2011 and the possibility of further stake sells," Sharper said.

France's state-controlled power utility, Electricite de France, owns 2.4 per cent of Areva. EDF may increase its stake in the reactor maker, the government said in July. Areva's mining unit may form partnerships, it has said.

Lauvergeon, whose mandate as CEO expires in June, is trying to prevent EDF, Areva's biggest customer, from raising the holding to a point where it gains a board representation.

A seat for EDF may discourage the power company's competitors from doing business with Areva, Lauvergeon said.

Both companies blamed each other for the loss of a contract to build four nuclear plants in the UAE to a Korean group last year, and they have wrangled over nuclear-fuel enrichment and waste recycling orders in recent months, forcing the government to step in.

About 4 per cent of Areva trades on the Paris stock exchange as non-voting investment certificates. Trading is currently suspended. They have risen 0.7 per cent this year, giving the company a market value of €12.5 billion.

The French government aims to list Areva shares by the end of the first half of 2011.

Areva, whose finances have been hurt by construction-cost overruns at a reactor in Finland, has already raised €5.2 billion in 2009 and 2010 by selling its power-grid unit, as well as stakes in Safran, GDF Suez and Total and other minority interests.

It has also sold €3.75 billion of bonds since September 2009.