EDF plans to sell UK supply unit

Logo of Electricite de France (EDF), is seen on a building in the financial district of la Defense near Paris April 30, 2009.

PARIS (Reuters) - French energy company EDF plans to sell EDF Energy, Britain's largest power distribution business, for more than 4 billion euros (3.7 billion pounds), joining a list of European utilities trying to sell assets to cut debt.

The world's largest nuclear power producer, which has been mulling the sale for months, said it hoped to finalise a deal by the first quarter of next year, despite delays in similar grid sale operations by peers such as Sweden's Vatenfall.

"We regularly receive spontaneous expressions of interest, but there has been nothing formal yet," EDF Chief Finance Officer Daniel Camus told a conference call.

European utilities have put over 60 billion euros of assets up for sale in 2009 to pay off hefty debt levels, which in the case of Italy's Enel topped 50 billion euros.

"There is a trend as many utilities are selling their networks. We have already seen, for example, Enel and ENI, which have sold their gas networks," said Colette Lewiner, head of utilities at French consultancy firm CapGemini.

Vattenfall has twice been obliged to delay the sale of its high voltage power grid in Germany due to the global economic downturn, and now hopes to close a deal in the final quarter of 2009.

EDF Energy could draw interest from major infrastructure funds such as those linked to Goldman Sachs, Morgan Stanley and Deutsche Bank as well as grid operators such as National Grid, but it might have difficulty fetching over 4 billion euros.

"In light of the financial crisis, we regard it as unlikely that EDF can realise a premium on the regulated asset value (RAV) ... which amounts to 3.8 billion euros," Sal Oppenheim said in a note.

Chief Executive Pierre Gadonneix added that EDF was studying other disposals, but he would not give any details.

EDF has said it wants to sell 5 billion euros of assets by the end of 2010. Group debt stood at 24.5 billion euros at the end of 2008, up from 16.3 billion a year earlier following the acquisition of British Energy.

The purchase had resulted in a better balance between EDF Energy's generation and supply businesses, EDF said.

EDF Energy's network serves more than 20 million people in London, the east and southeast of England. EDF said it had "significant future opportunities from grid and distribution network technologies."

Gadonneix told French members of parliament last month that EDF would meet its target of divestments worth 5 billion euros by the end of 2010.

Shares in EDF were 1.6 percent lower at 39.01 euros by 10:28 a.m., slightly underperforming the French blue-chip CAC 40 index.

Barclays Capital and Deutsche Bank are financial advisors to EDF, with "additional support" from BNP Paribas, EDF said.

(Additional reporting by Jonathan Gleave in Madrid and Quentin Webb in London; Editing by Will Waterman)