The French state will purchase the majority of the shares being sold by the energy giant. It is trying to stabilize its fragile balance sheet.
After ordering the sale of power at market prices, French President Emmanuel Macron was forced to put more than EUR2bn (£1.7bn), into EDF.
The French state will purchase the majority of the EUR2.5bn share sales by the energy giant. It is currently struggling to stabilize its crumbling balance sheet.
EDF is owned by the government at 84%. The government has informed EDF that it can only increase prices by 4% this year to protect households from rising energy bills.
This order, which took out a fifth of the firm’s worth last month, will reduce profits by EUR8bn in this year.
EDF is also experiencing a decrease in nuclear output while it repairs and maintains its fleet of older reactors.
The utility, based in Paris, stated that higher energy prices have driven an 11pc increase in earnings before interest tax, depreciation, and amortization last year. However, its outlook for 2022 is significantly worse.
It stated that the combination of lower nuclear output and price caps would cause profits to plummet by EUR11bn by 2022, more than the benefits of higher prices.
This government intervention is taking place just two months before the presidential election, in which President Macron is expected.
He has pledged to save the company financially and has also revealed plans to build a series of new nuclear reactors in the next decade. These will be constructed and operated by EDF.
Bruno Le Maire, the country’s finance minister, stated to French radio that the state had purchased EUR2.1bn worth of shares to support the company. However, he insisted that the transaction had nothing to do with full nationalisation.
EDF said that it will also sell EUR3bn more assets in the next two-years to increase its balance sheet. Investors will have the option to receive their dividends in shares in this and the next year.
EDF is also the owner of several UK gas-fired power plants and the UK’s nuclear fleet. EDF is currently building the Hinkley Point C nuclear power station in Somerset.
It also controls approximately 11% the UK’s domestic electricity market, and 9% of the gas market.
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