France: Nationalizes EDF again with 9.7 billion euros

The French government has offered to pay about 9.7 billion euros for the full nationalization of Electricite de France as it tries to resolve problems at the power company that are exacerbating Europe’s energy crisis.

The French government will offer 12 euros per share to acquire the 16% of EDF it does not already own, the French Ministry of Finance said in a statement.

That’s a 53% premium to the stock’s €7.84 close on July 5, the day before French Prime Minister Elizabeth Bourne announced nationalisation.

The company’s stock, which had been suspended since July 13 pending details of the plan, rose 15 percent to 11.75 euros.

“The price is at the high end of the range, considering peers and market conditions,” analysts said.

Estimates were for an offer price between 10.5-12.5 euros.

In the midst of Europe’s worst energy crisis in a generation, France wants to bring debt-ridden EDG under state control to keep household electricity bills under control while pushing ahead with massive investment to reduce the country’s dependence on electricity. imported fossil fuels.

The utility’s existing reactors have been plagued by deteriorating reliability, while construction of new facilities has been hampered by delays and cost overruns.

This poor performance, combined with the government-imposed electricity price cap, has made EDF’s debt increasingly less sustainable.

The nationalization may reassure EDF’s creditors of the company’s financial stability, but it will leave many more challenges for the successor to chairman and chief executive Jean-Bernard Levy, who is 67 and is due to step down in September.

According to the announcement, holders of convertible bonds will be offered 15.64 euros for each bond.