EDF partial privatisation sailing smoothly

17th November 2005, Comments 0 comments

PARIS, Nov 16 (AFP) - France's controversial partial privatisation of the electricity group EDF looks set to be a big success for the state after the rollercoaster ride shareholders went through following the 1997 privatisation of another industrial icon, France Telecom.

PARIS, Nov 16 (AFP) - France's controversial partial privatisation of the electricity group EDF looks set to be a big success for the state after the rollercoaster ride shareholders went through following the 1997 privatisation of another industrial icon, France Telecom.

The government appears to have succeeded in raising money and attracting the interest of small shareholders despite fierce opposition from French unions and the losses many France Telecom shareholders suffered when the IT bubble burst.

Up to 15 percent of Electricité de France (EDF) is to be sold off in a move aimed at raising around one billion euros for the state and seven billion euros for the group.

Although under EU rules France cannot use privatisation proceeds to directly reduce its excessive public deficit, the funds will nonetheless help the government as it struggles to honor financial commitments contained in the Maastrict treaty.

More than four million people have already signed up for shares ahead of the offer's expiration on Thursday, in the world's biggest capital increase since 2001. By comparison, about 3.9 million people subscribed to the France Telecom offer.

France Telecom was privatised at 182 francs (EUR 27.74) in 1997, and peaked at EUR 219 in 2000 before the IT bubble burst. Today the share is worth EUR 20.90.

However, few of France Telecom's 1.5 million small shareholders today have owned their stock since 1997, since the temptation to sell during the IT bubble was too strong.

The state has said its holding would not fall below 85 percent for the moment. The group can reduce its holding to 70 percent, the maximum allowed by law.

The partial privatisation values the group at EUR 55.0-63.5bn based on the subscription price range of EUR 28.50-33.10 per share.

The offering, which is highly controversial because of a long tradition of state-owned public services in France and advantageous employment conditions for staff, comes four months after the flotation of the national gas utility Gaz de France (GDF), which attracted three million French shareholders.

EDF is Europe's biggest utility and the largest supplier of civilian nuclear energy in the world, and has been been aggressively expanding internationally, racking up nearly 20 million dollars in debt.

French unions have accused the conservative government of prime minister Dominique de Villepin of forcing through the privatisation despite the concerns of workers, who fear job losses and a decline in the public service role played by major enterprises.

Copyright AFP

Subject: French news

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