Electricite de France Delays Plan To Sell UK Grids - Source

14th Jun 2010 10:32

HONG KONG (Dow Jones)--French utility company Electricite de France SA (EDF.FR) has further delayed a plan to sell its U.K. power grids, just a week before it was due to receive a second round of bids for the assets, a person familiar with the situation said Monday. Europe's biggest power generator had requested a second round of bids by June 21 in the sale of EDF Energy, another person familiar with the situation told Dow Jones Newswires in May. Binding offers were originally due by the end of May but Electricite de France delayed the process to enable bidders to carry out due diligence, as well as enable the trustees of the U.K. grids business pension plan to undertake a review of the bids EDF had received, the person said. EDF Energy is the largest electricity supplier in the U.K. Electricite de France has been looking to sell its U.K. power distribution business as part of plans to reduce debt. People familiar with the situation said earlier buyers were likely to be looking at valuations of around GBP4 billion to GBP4.5 billion for the assets. The people said last month that three parties were selected as second-round bidders for the assets: Hong Kong-based Cheung Kong Infrastructure Holdings Ltd. (1038.HK) together with its affiliate Hongkong Electric Holdings Ltd. (0006.HK); a consortium comprising sovereign-wealth fund Abu Dhabi Investment Authority, Macquarie Capital and Canada Pension Plan; and U.K. utility Scottish & Southern Energy PLC (SSE.LN) along with Canadian infrastructure fund Borealis. The person familiar with the situation didn't elaborate on Monday the reasons for the latest delay, and didn't say whether a new deadline has been set. However, the U.K. Sunday Times reported on Sunday that the auction could be delayed by a dispute over EDF Energy's pension fund. Citing unnamed sources, the report said EDF has been negotiating with the pension program's trustees over details of a change-of-control clause that requires any new owner of the business to top up the company's retirement plan for its employees. Separately, Hongkong Electric Finance Director Neil McGee said Monday the company is working very hard to secure financing for the bid for EDF Energy. "We found out that a lot more money than we originally expected has to be spent to bring the network's reliability up to Hongkong Electric's standards and we would have to take this into consideration when we're making the bid," McGee said in a statement. Cheung Kong Infrastructure, which is controlled by tycoon Li Ka-shing, owns about 39% of Hongkong Electric and said in May its consortium had been selected as a second-round bidder for EDF Energy. EDF Energy supplies electricity to 7.8 million homes and businesses in the east and southeast of England. It accounts for 28% of the electricity distributed in the U.K. -By Yvonne Lee and Joyce Li, Dow Jones Newswires; 852-2802-7002; [email protected] (END) Dow Jones Newswires June 14, 2010 05:32 ET (09:32 GMT)