Verbund to strengthen position in French electricity market

6/2/2009Wien

Verbund enhances its successful activities in the French electricity market by acquiring a further 13.3 % of French energy provider POWEO SA from stakeholder Charles Beigbeder and his holding company Gravitation.

At the closing of the transaction, which is still conditional, Verbund will hold 43.2 % and be the most important single stockholder of the listed company POWEO SA. Loïc Caperan, former Deputy CEO of EDF shall become CEO of POWEO SA. POWEO-founder Charles Beigbeder shall remain involved within POWEO as Chairman of the Board and consultant. In addition POWEO envisages launching a share capital increase for a maximum amount of 75 million euro in order to continue growth and accelerate renewable and CCGT generation projects as well as enforce POWEO’s position in French end customer market.

Since Verbund has entered into POWEO SA and POWEO Production share capital in April 2006, POWEO’s strategy is to become an integrated alternative energy operator both on the electricity and gas markets. The successful first phase of the partnership allowed POWEO to achieve its objectives, both in the development of generation capacities as well as electricity and gas supply to professional and residential customers. POWEO already owns 500 MW of built capacities, of which 412 MW for a 1st combined cycle gas turbine power plant located in Pont-sur-Sambre, Northern France. Furthermore it has a wind and hydro power portfolio of 71 MW. POWEO provides energy supply to about 340,000 customer sites.

In order to continue POWEO’s development, subject to satisfaction of certain conditions on or before September 30, 2009, Verbund has decided to increase its stake in POWEO SA share capital by acquiring the 13.3 % stake owned by Charles Beigbeder and his holding company Gravitation. This acquisition shall bring Verbund from 30 % to 43.2 % of the share capital and voting rights assuming the double voting rights to be cancelled. The proposed purchase price is of 29 euro per Poweo share. The acquisition implies, in particular:

  • a simplification of the governance of the group;
  • the end of the existing shareholders’ agreement and "action de concert" between Verbund, Gravitation and Charles Beigbeder;
  • the appointment of three new Verbund representatives at POWEO SA Board of Directors. Charles Beigbeder remains Chairman of the Board of Directors.

The closing of this transaction, which is subject to certain conditions precedent, including, in particular, approval by the competent anti-trust authorities, is expected to occur during the summer.

Charles Beigbeder will still contribute to POWEO’s future development with both the support of POWEO’s teams and key shareholder Verbund. He shall remain Chairman of the Board and will also be in charge of some strategic tasks for the company as a consultant. Subject to the approval by Poweo’s Board and general meeting, he will receive stock options allowing subscription of a maximum 300,000 POWEO’s shares at a price of 29 euro per share.

After the closing of the transaction, Loïc Caperan will be appointed CEO of the group. His outstanding experience following his career within major industrial groups such as Renault and Fiat but above all as Deputy CEO of EDF during five years, will significantly benefit to POWEO’s new development phase.

Verbund is one of the TOP-five hydro operators in Europe. Its know-how has been acquired through the operation of major hydro infrastructures especially in the Austrian Alps. Combining Verbund’s  expertise together with POWEO position as a leading alternative operator on the French market, this partnership is well-positioned to participate in the over 5,000 MW hydro concession renewals expected to take place by 2012 in France. 

In order to continue its growth and in particular finance its development projects including the Toul power plant, POWEO envisages launching a share capital increase for a maximum amount of 75 million euro, depending on market conditions and the main shareholders’ intentions, which shall be open to all shareholders pro-rata.

It is presently contemplated that Verbund, Charles Beigbeder and Gravitation will subscribe to the rights issue up to at least their percentage ownership in POWEO SA and that the balance would be subscribed by the other shareholders or underwritten by the banks in charge of the rights issue. This capital increase should occur before the completion of the acquisition by Verbund of POWEO shares held by Gravitation and Charles Beigbeder.

Terms and conditions of this rights issue will be disclosed in the legal documentation to be filed for approval by the French financial market authority (AMF).

Following these transactions and depending upon final terms of the rights issue, Verbund shall approximately own a minimum of 43.2% of POWEO SA share capital and a maximum of 48 % thereof.

Christian Kern, Member of the managing board of Verbund responsible for international business declares: « The proposed strengthening of our position as the reference shareholder of POWEO is a clear evidence of our conviction in the opening up and the growth potential of the French energy market. This deal fits perfectly with our international development strategy. Besides, POWEO will benefit with the joining of Loïc Capéran of a seasoned CEO who knows the French market from inside out. This is, in our view, a strong sign of continuity since POWEO must remain a French company managed by French executives. Lastly, our Group will support POWEO not only for developing in hydro-power but also through our numerous other fields of expertise ».

POWEO is now ready for a new cycle of growth

- POWEO made the right strategic choices
Since 2005, POWEO has focused its strategy to become an integrated alternative energy operator through the combination of a diversified customer base as well as generation capacities. This business model allows balancing the development of the group on complementary activities.

- POWEO’s future is based on two growth areas : power generation and supply
The lack of generation capacities in France to cover demand during peak hours legitimates the choice of POWEO to invest in combined cycle gas turbines .

Ambitious targets of France in renewable energies are also a strong driver for POWEO’s projects.

Recommendations made by the Commission Champsaur will accelerate market opening for industrial and residential customers in France. And will enable POWEO to further grow in volume and profitability capitalizing on its excellent market reputation and its existing customer base.

- POWEO's future development is secured
The stronger partnership between POWEO and Verbund will facilitate POWEO's access to capital resources and enhance considerably the capacity of POWEO to deliver its portfolio of projects, and therefore will secure the profitable and sustainable growth of the company.

- First gas turbine built, two more to come
First firing of POWEO's CCGT power plant at Pont-sur-Sambre (412 MW) occurred last month. Based on that success, POWEO and Verbund are developing on a second power plant in Toul with comparable power generation capacity. Start of operations is expected at the end of 2011. Within conventional generation pipeline, a third CCGT plant of 800 MW is under advanced study in the North of France, at Blaringhem.

- POWEO develops also generation capacities in renewable energies
Based on Verbund’s support as well as the strong experience of one of the best team in that field, POWEO also develops generation capacities in wind, hydro, solar and biomass. POWEO currently operates 71 MW. Several other projects are under construction or development.

- Partnership of POWEO and Verbund in hydro-power
Verbund is one of the TOP-five  hydro operators in Europe. Its know-how has been acquired through the operation of major hydro infrastructures especially in the Austrian Alps. Combining Verbund’s expertise together with POWEO position as a leading alternative operator on the French market, this partnership is well-positioned to participate in the over 5,000 MW hydro concession renewals expected to take place by 2012 in France. 

- POWEO, the leading alternative operator, shall develop even further thanks to the Commission Champsaur’s recommendations 
The Commission Champsaur has recommended, in its report on the opening up to competition of the French electricity supply market, to grant to every active supplier an access to base-load electricity at a regulated price which must reflect the economic conditions of the nuclear generation park, with volumes allocated in proportion to customer base. This solution should allow developing the electricity market while ensuring a secured sourcing and fair prices for end consumers. POWEO, which already holds about 340,000 customer sites at the end of April 2009, shall fully benefit from these new market conditions to speed up its commercial development.