Bloomberg: Constellation, EDF in negotiations
From a Bloomberg story today:
Electricite de France SA, Europe’s biggest utility, and Constellation Energy Group Inc. are in talks to avoid the collapse of their U.S. nuclear venture, according to two people with knowledge of the discussions.
The companies are negotiating to resolve a dispute over an option Baltimore-based Constellation has to sell non-nuclear plants to EDF for as much as $2 billion, the people said, declining to be identified because the talks are private. The so-called put, due to expire in December, was agreed to in 2008 when Constellation sold half its nuclear business to EDF.
It's basically what I reported and what Constellation said on the record a week ago. From my Sunday column:
There's also leftover business from almost two years ago, when EDF, parent of Electricite de France, bailed Constellation out of a mess by buying almost half its nuclear operation. As part of that rescue, it also gave Constellation an option to sell non-nuclear generation plants to EDF for up to $2 billion.
The option expires Dec. 31. Constellation doesn't need the cash nearly as badly as it did during the financial crisis. But EDF, which has better things to do with its money these days, seems increasingly concerned that Constellation boss Mayo Shattuck will pull the trigger to unload the assets.
Such a move would cause a "breaking point" that "will destroy the credibility of the management" at Constellation, EDF Chairman and CEO Henri Proglio said in a telephone interview Friday...
"We are committed to working with EDF to resolve these issues," [Constellation] said in an e-mailed statement. But, it added, both companies face an "increasingly challenging economic and policy environment." Constellation, it said, must be mindful of "our contractual rights and obligations and the interests of our shareholders."
The Energy Department guarantee is the fulcrum. If Washington backs a new reactor at Calvert Cliffs, Constellation and EDF may have a baby to raise, a reason to stay together and compromise on the put option. If the project dies, Shattuck has little reason not to cram the coal plants down EDF's throat.
It's worth wondering how serious the negotiations are since EDF boss Henri Proglio was in town a week ago and didn't meet with anybody from Constellation.