Ministers Bid To Unblock £10bn Urenco Sale

The Government will hold talks with German officials this week in an attempt to unblock the £10bn privatisation of Urenco, the uranium processing giant.

Sky News has learnt that talks have been scheduled between two of the three shareholders in the UK-based company amid concerns that securing the approval of the third investor - the Dutch state - is proving excessively complex.

The German stake in Urenco is held by two state-owned utilities, EOn (Taiwan OTC: 3411.TWO - news) and RWE (Xetra: 703712 - news) .

In a statement issued to Sky News following an enquiry about this week's talks, a spokesman for the Department of Business, Innovation and Skills said: "No final decision has been made by the British Government on the sale of its shares in Urenco.

"We continue to move forward with preparations for the sale of our shareholding.

"Any sale of our shareholding will be contingent on safeguarding our security and non-proliferation interests, and delivering value for money for the UK taxpayer."

George Osborne, the Chancellor, has signalled Britain's willingness to sell its stake, which could raise £3bn, according to some analysts.

His recent decision to bring the Shareholder Executive, which manages the Urenco stake, under the Treasury's aegis is said to have resulted in a renewed effort to unblock the impasse.

However, any sale requires the agreement of all three shareholders, and talks are not thought to have meaningfully progressed for some time.

This week's meeting will come as Urenco continues searches for a new chairman to replace Sir John Hood and a successor to Helmut Engelbrecht as chief executive.

A process to replace Sir John has been under way for most of this year, according to people close to the matter, with some candidates understood to have been deterred from pursuing the role because of the uncertainty over Urenco's future.

A stock market flotation of the company, as well as bids by nuclear industry participants and private equity groups, have all been mooted during years of tortuous negotiations between the shareholders.

Sir John and Mr Engelbrecht will both remain in place until successors are appointed.

An initial public offering (IPO) through a stock market flotation has not been ruled out, but the Dutch government has historically been less keen on such a move than on an outright sale to a major player in the energy industry.

Urenco's technology and assets are so sensitive that its current owners will impose strict safeguards on any future shareholders.

A privatisation of the company, which is based in the UK, could generate proceeds larger than virtually any other non-bank asset sale by the British Government for many years.

Urenco's activities are governed by the Treaties of Almelo, Cardiff and Washington, which were drawn up in an attempt to control the proliferation of nuclear technology and stop enriched uranium from falling into the hands of terrorists.

Tepco, the Japanese energy group, was seen as an obvious buyer of Urenco until the devastating earthquake and tsunami in 2011 triggered a crisis at the Fukushima reactor.

Cameco (Swiss: CCO.SW - news) , a Canadian uranium producer, Mitsubishi of Japan and Areva (Paris: FR0011027143 - news) , the French nuclear group, are among those expected to bid.

Several private equity groups, including Apax Partners, Carlyle and KKR, have also assessed the prospect of submitting offers.

A number of investment banks have won roles on the deal, with Morgan Stanley (Xetra: 885836 - news) , the Wall Street firm, advising the UK Government.

The two German utilities backed by Berlin are being advised by Bank of America Merrill Lynch, while ABN Amro is working with the Dutch government.