EDF would prefer to keep Edison listed, CEO says

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Listed French electricity giant EDF [EDF FP: A+/Aa3] would much prefer to keep Edison [EDN IM:BBB-/Baa3] listed on the Milan Stock exchange rather than take complete control of the Italian electricity group, Henri Proglio, CEO of EDF told dealReporter.

“I believe Italian players would be satisfied if Edison remains listed,” Proglio emphasized in Paris last Thursday following EDF’s results presentation.

Last Wednesday, EDF signed binding agreements with its Italian partners that will push its stake to just over 80% of Edison. Proglio emphasized his views on the listing were not prompted by lack of enthusiasm about buying up the 20% remaining stake, but because of the symbolic impact of Edison’s listing in its home country.

The deal is still subject to antitrust approval and Consob accepting EDF’s proposed EUR 0.84 per share price. A person close to Consob said that while the authority does not have a deadline to respond to EDF, it is likely to make a decision by the end of the month.

While it is not known what decision Consob will make, a source close to Edison, said that it would be impractical for the authority to ask for a higher price.

“There is no room to increase the price....to say that EDF has to offer a higher price would mean going back to the negotiating table and at the moment Edison needs support,” he said. In December, both Moody’s and Standard & Poors had said that Edison could be downgraded if EDF did not come to an agreement with its Italian partners.

However, it is not yet known how many majority shareholders will tender to the offer at EUR 0.84 a share. It is up to Consob to decide on the percentage that would need to be traded on the stock market to avoid delisting, Proglio said. If a company accumulates 95% of the share capital of a target after a takeover bid it has to squeeze out the remaining shareholders if any one of them requests it, according to article 108 of Italy’s Consolidated Law on Finance

In any event, the Edison operation is going to increase EDF’s debt, Thomas Piquemal, the company’s CFO added. Net financial debt at the end of December 2011, stood at EUR 33.3bn. The impact of the Edison deal will not be negligible, Piquemal explained. That is because Edison’s debt is EUR 4bn. In the past, when EDF had 50% of the Italian group, it only consolidated EUR 2bn. If EDF ends up with 100% of Edison, it would have to consolidate an extra EUR 2bn.

Furthermore, the bid for the minorities will cost anything from zero (if no minorities tender to the offer) to EUR 900m.

EDF is also planning further investments this year of around EUR 1.5bn, particularly in nuclear energy so the by year end 2012 net financial debt could end up somewhere just below EUR 38bn.

EDF has not envisaged a major divestment plan to reduce debt. The group wants to keep its net debt/Ebitda ratio to around 2.4x in 2012 . This can be achieved by increasing EBITDA , said Henri Proglio.

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