Urenco Hunts Chair Ahead Of £10bn State Sale

The chairman of Urenco, the uranium processor jointly owned by the UK and two other European states, is preparing to step down, adding a fresh complication to a long-running £10bn privatisation plan.

Sky News has learnt that headhunters - thought to be from Egon Zehnder International - have been appointed to identify a successor to Sir John Hood.

A process has been under way for several months, according to people close to the process, although no public announcement has been made about Sir John's plans to leave Urenco.

The recruitment of a new chairman will be a crucial decision for the British and Dutch governments as well as the two German utilities - EOn and RWE - which own one-third stakes in the nuclear fuel processor.

George Osborne, the Chancellor, signalled during the last parliament that ministers were keen to offload the UK's stake in the company, which analysts have said could be worth more than £10bn.

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

“No final decision has been made by the government on the sale of its shares in Urenco," a spokesman for the Department for Business, Innovation and Skills said in December.

"We announced in April 2013 that we would move forward with preparations for the sale of our shareholding; however, 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.”

Sir John, who will remain in place until a successor is appointed, has had a bruising few months in his roles on the board of BG Group (LSE: BG.L - news) , the oil and gas explorer, and WPP (LSE: WPP.L - news) , the world's largest marketing services group.

As chairman of BG's boardroom pay committee, he was criticised for approving a huge remuneration package for Helge Lund, its new chief executive, which had to be modified amid substantial opposition from shareholders.

At last week's annual meeting, more than 13% of investors voted against his re-election, while he could also face a protest vote at WPP's AGM over pay-related issues.

The timetable for his departure as Urenco chairman is unclear.

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.

Uenco'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 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, a Canadian uranium producer, Mitsubishi of Japan and Areva, 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 UK ministers.

The two German utilities backed by Berlin, EON (Taiwan OTC: 3411.TWO - news) and RWE (Xetra: 703712 - news) , are being advised by Bank of America Merrill Lynch, while ABN Amro is working with the Dutch government.

A Urenco spokesman declined to comment on the process to appoint a new chairman.