SP lowers the note and Areva of Newco to “B” – Romandie.com

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SP lowers the note and Areva of Newco to “B”

Paris – The financial ratings agency SP Global Ratings downgraded Wednesday the rating of long-term credit of Areva and its new entity Newco by one notch to “B” from “B+” due to the deferral of the recapitalization of the nuclear group.

“This degradation is primarily driven by the related condition (the vessel of the EPR) Flamanville, imposed recently by the european Commission to approve the recapitalization of 5 billion euros Areva”, explains the agency in a statement.

In big trouble, Areva, owned at 86% by the French State, is engaged in a rescue plan including recapitalisation but also the transfer of its activity reactor (Areva NP) to EDF, in order to focus on the fuel cycle by establishing a new entity, called Newco.

The recapitalization consists of two capital increases: one of € 2 billion for Areva SA, the holding company at the head of the future group, which will combine the assets at risk and those which are intended to be disposed of, and the other € 3 billion will be for Newco.

In total, the French State must contribute 4.5 billion euros ($ 2 billion for Areva SA and $ 2.5 billion for Newco). Third-party investors — the two japanese groups MHI and JNFL according to a source close to the folder — are committed to provide 500 million euros remaining in exchange for 10% of the share capital of Newco.

But the operation will not take place as early as February, as expected by Areva, because if Brussels has given the green light to this restructuring, it was accompanied by two conditions: the approval by the european Commission of the takeover of Areva NP by EDF and the positive conclusion of the analysis of the anomalies observed on the vessel of the EPR of Flamanville (Manche).

The French nuclear safety Authority (ASN) has provided its opinion on the tank of the EPR towards the end of the first half.

In its press release, SP says he has relied from the outset on the fact that the recapitalisation would take place in early 2017. But in light of recent events, “we expect this to take place mid-2017,” says the agency.

“We have little visibility at this stage on the conclusions” regarding the EPR, she adds. “A negative finding could adversely affect, even in the worst-case scenario, jeopardize the restructuring plans of Areva”, she says.

Concerning the purchase of Areva NP EDF, if it were to fail, “which is not our base scenario, this would result in significant costs and would require financial support, which would jeopardize the restructuring of Areva,” says SP.

conversely, the agency indicates that it could go up one notch the rating of Areva and Newco in the event of a positive conclusion on Flamanville.

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AREVA

(©AFP / 18 January, 2017 23: 00)