PARIS/AMSTERDAM (Reuters) – French power company EDF (EDF.PA) said it was pressing on with the next stage of a potential sale of its British distribution arm, ending speculation that management changes had blocked the process.
An EDF spokeswoman said on Wednesday details had been sent to potential buyers, confirming what two sources familiar with the matter had told Reuters earlier.
“This is part of the process initiated in October. There are many exchanges of information. But let me be clear this does not mean we have decided to sell. We are evaluating our options,” the spokeswoman said.
EDF, the world’s largest single generator of nuclear power, said in October it was exploring “ownership options” for its UK distribution network. It is hoping to get more than 4 billion euros ($5.5 billion) for the network to help cut its debts.
The sources said that EDF has now set a deadline of mid-March for bids in the sale of its three British distribution network operators. Asked about the deadline, EDF’s spokeswoman declined to comment.
THE PROGLIO EFFECT
The sale process has been clouded in recent weeks by the entrance of EDF’s new chief executive Henri Proglio who industry sources say is sceptical of the plan to sell the network.
The EDF CEO has been in the spotlight in recent weeks as opponents howled over his salary and intention to retain a non-executive chairman role at water and waste company Veolia (VIE.PA) where he was CEO before joining EDF which has now to pay down roughly 40 billion euros in debt.
“It’s not in EDF’s DNA to sell anything but they need the money — and networks in the UK are the only thing they can sell without political or public implications,” said a banker involved in the deal.
He added that management’s reluctance could turn the sale into a long-term process that could drag on indefinitely without a winner being chosen “for months, even years”.
The UK network delivers electricity to more than 20 million Britons and generated earnings before interest and tax (EBIT) of 500 million euros on sales of 8.24 billion euros in 2008.
The networks benefit from stable returns and the ability to take a fair amount of debt. But margins have been squeezed by a December ruling from the British regulator Ofgem saying it would restrict post-tax returns on capital at the network and would review merger policy by mid-2010. [ID:nGEE5B61YB]
That news caused EDF rival Scottish & Southern Energy (SSE.L), which already owns two of Britain’s 14 networks and had said it was considering an offer alongside Canada’s Borealis, to say it would reconsider its bid plans.
High-voltage network operator National Grid and Hong Kong’s Cheung Kong Infrastructure Holdings (CKI) have both said they are interested in the business, while people familiar with the matter have said Australia’s Macquarie (MQG.AX), Canada Pension Plan (CPP), and the Abu Dhabi Investment Authority (ADIA) have formed a consortium and are also likely to bid.
Axa private equity (AXAF.PA) may also consider a bid, one source said. ($1=.7255 euros)
By Nina Sovich and Greg Roumeliotis
(Editing by Mike Nesbit)