AREVA has begun transferring nuclear fuel cycle activities to its newly formed NewCo, the French company announced Tuesday as part of a mass restructuring meant to raise at least 5 billion euros for the company through government investment and asset sales.
The company has drawn up a draft partial transfer agreement, which AREVA SA will execute. The transfer to NewCo involves all assets and liabilities related to nuclear fuel cycle activities, including mining, front end and back end activities, and bondholder debt. The assets and liabilities have been valued at 1.4 billion euros, or 2 billion euros when accounting for tax consolidation.
The company’s bondholders are expected to meet Sept. 19 to approve the proposed partial transfer of assets from AREVA SA to NewCo and the simultaneous transfer of bond debt to the new spinoff entity, according to the announcement. AREVA SA has scheduled its Extraordinary General Meeting for Nov. 3, where the company is expected to approve the draft partial transfer agreement.
As announced in June, the French state utility is expected to control up to 67 percent of NewCo, directly and indirectly, while the remaining third is offered for private investment. The restructuring involves capital increases of 5 billion euros for both AREVA SA and NewCo, with the French state offering to act as lead shareholder.
AREVA CEO Philippe Knoche signaled in June that AREVA wants to become “a profitable and competitive player,” starting with consolidation of company fundamentals. NewCo is envisioned as a “a new, more profitable, less risky company focused on fuel cycle operations,” according to AREVA.
According to AREVA documents, the company’s mining business delivered 35 percent of 2015 revenue for the three entities being transferred to NewCo. Front end activities made up 26 percent of the revenue, while back end activities made up 38 percent. NewCo shows 32 billion euros in revenue backlog, or future contract revenue, for 2016, including 9.4 billion euros from mining, 11.5 billion euros from front end, and 11.6 billion euros from back end.
AREVA Chief Financial Officer Stephane Lhopiteau, through an interpreter during a presentation Tuesday, said that a refocus on the nuclear fuel cycle will benefit from “interesting assets” and “the promising prospect of development,” allowing NewCo to maintain a high-profitability level and generate significant cash flow. Lhopiteau added that the company is relying on the support of its bondholders, which will be the first significant hurdle in making the transfer a reality.
