EDF to sell UK grid operations

UNITED KINGDOM - French utility Electricite de France SA (EDF) is considering options regarding the sale of the company's United Kingdom power distribution network in order to alleviate financial debts of up to 5 billion euros (US$7.3 billion) by 2010.

EDF has said that it is initiating a process to evaluate "ownership options" for its electricity distribution business in the UK. The company is the biggest electricity distribution network operator in the country, with a grid serving 15 million people living in London and southeastern and eastern England. The sale is expected to draw significant interest from buyers as the area served by the grid, which includes the country's main airports, utility companies and travel networks, is responsible for 40% of the nation's GDP. A sale is expected to be concluded by next March.

EDF Chairman and CEO Pierre Gadonneix said: "The process to evaluate ownership options for our UK electricity distribution networks is part of the announced asset divestment program, aiming to reduce our net financial debt by at least 5 billion euros. It is also part of our development strategy in the United Kingdom, which is a key market in Europe for the group. This process follows British Energy's acquisition, which facilitates EDF's plans to develop new nuclear power in the UK and significantly strengthens our position as a UK energy player."

The energy giant, 84% of which is owned by the French government, currently has debts of almost 37 billion euros, largely because of the company's 13 billion euro (US$19 billion) buyout of British Energy in 2008 and the planned 3 billion euro (US$4.4 billion) investment for a 49.9% stake in U.S. power company Constellation Energy Group Incorporated. In May, EDF sold a 20% stake in British Energy to Centrica plc in a deal worth 2.43 billion euros (US$3.56 billion).

EDF Energy CEO Vincent de Rivaz added: "As a responsible company, EDF Energy will continue the dialogue with its employees and other key stakeholders throughout this evaluation process. This unique combination of three regulated networks covers a key region vital to the UK economy. It has a highly experienced and skilled workforce, which has a strong track record of delivery and is well placed for growth."

EDF's grid operations employ more than 4,500 people. Interested buyers at this early stage are expected to include investment banks such as Deutsche Bank AG and Morgan Stanley, the Abu Dhabi Investment Authority, National Grid plc, a series of Canadian pension fund operators, and Cheung Kong Infrastructure, owned by Asia's richest man, Li Ka-shing.