EDF Share Fallout Over Hinkley Funding Plan

Investors have fled EDF (Paris: FR0010242511 - news) shares after the French firm confirmed new cash-raising plans aimed at cutting debt and funding the Hinkley Point C nuclear plant.

Markets had closed on Friday when EDF confirmed it was seeking €4bn through the sale of new shares.

It (Other OTC: ITGL - news) pledged more operational cost savings and money from asset sales to help ease shareholder concerns but the company lost 11% of its market value during Monday's trading.

EDF, majority-owned by the French government, said the "significant recapitalisation" made it possible to proceed with Hinkley Point C in Somerset, though a final investment decision had been put back further to allow for union consultation.

Labour representatives have been among those raising feasibility worries.

The French economy minister has indicated he now expects a final decision on the £18bn project in September.

EDF said the French state would be contributing €3bn to the rights issue, adding the move would provide EDF with a "solid financial footing notwithstanding the challenges of current market conditions".

Hinkley Point C was expected to start producing electricity by 2025 but the issue of funding has held back the go-ahead.

As EDF's bosses met on Friday, Greenpeace threatened the prospect of legal action if it thought any funding arrangement to build the new power station amounted to illegal state aid.

EDF has invested almost £2.5bn to date and is unwilling to write off that sum by pulling out of Hinkley Point C.

Hinkley would be the first nuclear power plant to be built in Britain in two decades.

EDF is financing two-thirds of the project with the rest coming from Chinese investment.