French nuclear group Areva said that the collapse of talks with Finnish counterpart TVO would not hinder its proposed state-backed bailout or the sale of its nuclear reactor division to utility EDF.
Areva and TVO have been in negotiations to resolve multibillion-euro legal claims relating to cost overruns at the Olkiluoto 3 nuclear plant in Finland, but the talks collapsed two weeks ago.
This raised fears that, without clarity on the future of the project, Areva would be unable to sell its Areva NP reactor division, valued at €2.5bn, to EDF. This sale is seen as a crucial part of a wider restructuring to save the company.
On Wednesday, Philippe Knoche, Areva chief executive, said that the “door was open” to a deal with TVO but outlined “other options” to push ahead with the restructuring without a settlement.
Areva and TVO have been exchanging blows in the media over the collapse of the talks.
TVO told the Financial Times this week: “We don’t really understand why we don’t proceed with the negotiations. Our understanding is that it has something to do with the restructuring in France or the politics.”
Areva was brought to its knees in part due to the Finland project, with TVO the first customer for its European pressurised reactor technology — due to also be used at the UK’s controversial Hinkley Point power station.
The project is already 10 years behind schedule and €5bn over budget, helping to push the group to a record €4.8bn net loss for 2014 and €2bn for 2015. This led to a state-funded bailout being agreed this year.
Areva, and its former joint venture partner, Siemens of Germany, are suing TVO for €3.5bn in an arbitration case, while the Finnish company is countersuing for €2.6bn.
Mr Knoche said on Wednesday that the company had worked out a “Plan B” if the TVO talks do not restart. This would involve moving all the activities of the old Areva NP except the Finnish project into a new company that could then be bought by EDF. The risk for the Olkiluoto 3 project would then remain indirectly with the French state.
The government rescue package will see the company raise €5bn in the markets. The EDF sale was also agreed in principle, radically shrinking the group.
Mr Knoche outlined a strategy for the new Areva, which after selling its nuclear reactor business will focus on uranium mining, enrichment, recycling and nuclear decommissioning. The new company is provisionally being called NewCo.
“NewCo has strong assets in terms of technology, order book and skill base and is well positioned for a rebound of the global nuclear market,” he said.
Mr Knoche said the French state wants to hold 67 per cent of NewCo and that strategic investors will be invited to buy up to 33 per cent of the company’s capital.
NewCo will still burn cash in 2016-17 but should turn cash positive from 2018, he said, but declined to say when it could start paying a dividend. “The focus will be on repaying our debt,” he said.
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