PARIS (Reuters) - French state-owned utility EDF (EDF.PA) launched a planned 4 billion euro (3.45 billion pounds) capital increase on Tuesday as its shares traded near all-time lows.
The French government confirmed it will contribute 3 billion euros, but EDF will seek to sell another billion worth of new shares into equity markets. The operation will finance the utility’s development for the next three years.
Chief Executive Jean-Bernard Levy told financial daily Les Echos that EDF would try to find new long-term shareholders and that it had met with French, British, German and U.S. investors, to whom it would present the operation in coming days.
The utility will also launch a campaign to convince its 800,000 French individual shareholders to buy equity.
EDF shares fell to an all-time low of 8.83 euros in mid-January due to low power prices and a series of unexpected closures of its French nuclear plants for safety reasons, which weighed on electricity production.
At Monday’s 9.62 euro close, the shares were down 89 percent on their 86.45 euro 2007 high, and down 70 percent on their 32 euro IPO price in 2005.
“We are going through a difficult time right now, but the share has a strong capacity to rebound,” Levy said.
EDF shares traded 0.7 percent lower by 1100 GMT.
EDF said the subscription ratio for the rights issue would be three new shares for 10 existing shares, with a subscription price of 6.35 euros per share, a discount of 34.5 percent on Monday’s closing price.
EDF shareholders will receive one preferential subscription right per share. Trading in the rights will run from March 8-17.
Levy said that as a result of the operation, the French state, which holds 85.6 percent of EDF stock, will see its stake reduced to 84.5 percent.
He added that the combination of the capital increase and stock dividends on the 2015, 2016 and 2017 financial years would add up to an 8 billion euro boost to EDF’s capital.
He also said that as long as EDF shares’ free-float remains modest, it was unlikely that EDF would return to the French bourse’s CAC 40 benchmark index.
Last month, EDF pledged to deliver positive cash flow next year before it has to invest in upgrading its ageing French nuclear plants and build new reactors in Britain.
($1 = 0.9447 euros)
Writing by Geert De Clercq; Editing by Randy Fabi and Dale Hudson