French energy group EDF has launched a share capital increase with preferential subscription rights to existing shareholders, for a gross amount of approximately €4bn. The subscription price for the new shares has been set at €6.35 per share, which represents a discount of 28.8% on the theoretical value of the ex-right share, and 34.5% on the closing price of EDF’s share on Euronext Paris (€9.69) on 3 March 2017.
The French State, which owns 85.3% in the group, has undertaken to subscribe for an amount of €3bn, representing approximately 75% of the Rights Issue and will sell preferential subscription rights (by any means including by way of block trades or accelerated book-building).
The proceeds from the Rights Issue will primarily be used to finance the Group’s development operations during the period between 2017 and 2020, in line with the CAP 2030 strategy, and more generally, to strengthen the Group’s financial flexibility. EDF is investing more than €20bn (£18bn) in the Hinkley Point C nuclear project in the United Kingdom and is taking over Areva NP, in a context of falling wholesale power prices in Europe, and significant delays and cost overruns in the construction of two EPR projects in Europe, Olkiluoto 3 (built by Areva), and Flamanville in France. In addition, EDF will need to invest at least €55bn to refurbish its existing nuclear fleet in France to operate beyond 40 years ("Grand Carénage" programme).