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EDF in E11bn share sale for pensions, debt

FRANCE - Electricite de France, EDF, the French electricity company transformed that became a limited company last week, is set to sell up to 11 billion euros in shares in a bid to repay debts, finance its development and foot its pension bill.

“The government has the objective to prepare a capital increase ranging from eight to 11 billion euros in 2005,” the economy, finance and industry ministry stated today.

Finance minister Nicolas Sarkozy presented the cabinet with the plan, based on a report prepared by Marcel Roulet on the condition of EDF.

The Roulet report revealed “that on the financial point of view, the situation of EDF is fragile and requires a strengthening of its equity”.

A week ago, Roulet told the press: "The minister Sarkozy hopes the government makes up its mind quickly”.

EDF, together with gas company, GDF, was given ‘Societe Anonyme’ status last week, as the act passed by parliament in August was published in the official gazette.

As a limited liability company, EDF has the right to increase its capital to develop its development. The state, however, is still the main shareholder, controlling 70% of shares and voting rights.

In addition, the head of state has the responsibility to appoint the chief executive officer and chairman, under proposal of the company’s 18-strong-board of directors.

Sarkozy, who is to resign from his position to head the ruling UMP party, has also asked Jean-François Cirelli, president of GDF, to prepare a share sale for 2005.

The ministry has stressed it would be “of a limited amount, bearing in mind its good financial situation”.

Sarkozy’s office was not available for comment.

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