By Michael Erman
NEW YORK, Oct 16 (Reuters) - French power company EDF is proposing to hold an 'all hands' meeting with U.S. partner Constellation Energy Group Inc on Tuesday, in an effort to resolve disputes over their nuclear project and a Constellation-held option that could end up costing EDF up to $2 billion, according to sources familiar with the matter.
Constellation unilaterally pulled out of the federal loan guarantee process for the companies to build a new nuclear reactor at the site of its Calvert Cliffs plant in Maryland last week, which could kill the multibillion dollar project.
The two companies have both suggested paths for the project to move forward over the last week, with Constellation offering to sell its stake in the UniStar partnership that is overseeing the Calvert Cliffs project to EDF for $1 plus $117 million in reimbursement for previous costs.
But EDF still believes that no move can be made to resolve the dispute over Calvert Cliffs until they can resolve their dispute over Constellation's option to sell EDF up to $2 billion of nonnuclear assets, one of the sources said.
EDF is proposing that the meeting be held in Washington, one source said. According to that source, the group EDF would bring includes Thomas Piquemal, its senior executive vice president in charge of finance, as well as financial advisers from Lazard and the company's lawyers.
The U.S. company picked up the option as part of a deal signed in 2008 when Constellation was facing serious liquidity issues.
Throwing a lifeline to Constellation, EDF agreed to buy a 49.9 percent stake in Constellation's operating nuclear business and also gave Constellation the option, which expires at year-end.
The French company believes the option was meant as a liquidity backstop and was not meant to be used if Constellation's liquidity improved like it has.
But the market value of gas and coal-fired power assets has declined markedly since 2008, meaning the option could be quite lucrative for Constellation.
The U.S. company has said proceeds from exercising the option could be $1.4 billion.
EDF has said that it believes the option is not exercisable under present circumstances and threatened litigation if Constellation chooses to do so.
Sources told Reuters last month EDF is considering a range of options for its U.S. operations, including selling its stake in Constellation's operating nuclear plants.
A Constellation spokesman could not immediately be reached for comment.
(Reporting by Michael Erman; Editing by Doina Chiacu) Keywords: EDF CONSTELLATION/ (Reuters Messaging: michael.erman.reuters.com@reuters.net +1 646 223 6021) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Oct 16 (Reuters) - French power company EDF is proposing to hold an 'all hands' meeting with U.S. partner Constellation Energy Group Inc on Tuesday, in an effort to resolve disputes over their nuclear project and a Constellation-held option that could end up costing EDF up to $2 billion, according to sources familiar with the matter.
Constellation unilaterally pulled out of the federal loan guarantee process for the companies to build a new nuclear reactor at the site of its Calvert Cliffs plant in Maryland last week, which could kill the multibillion dollar project.
The two companies have both suggested paths for the project to move forward over the last week, with Constellation offering to sell its stake in the UniStar partnership that is overseeing the Calvert Cliffs project to EDF for $1 plus $117 million in reimbursement for previous costs.
But EDF still believes that no move can be made to resolve the dispute over Calvert Cliffs until they can resolve their dispute over Constellation's option to sell EDF up to $2 billion of nonnuclear assets, one of the sources said.
EDF is proposing that the meeting be held in Washington, one source said. According to that source, the group EDF would bring includes Thomas Piquemal, its senior executive vice president in charge of finance, as well as financial advisers from Lazard and the company's lawyers.
The U.S. company picked up the option as part of a deal signed in 2008 when Constellation was facing serious liquidity issues.
Throwing a lifeline to Constellation, EDF agreed to buy a 49.9 percent stake in Constellation's operating nuclear business and also gave Constellation the option, which expires at year-end.
The French company believes the option was meant as a liquidity backstop and was not meant to be used if Constellation's liquidity improved like it has.
But the market value of gas and coal-fired power assets has declined markedly since 2008, meaning the option could be quite lucrative for Constellation.
The U.S. company has said proceeds from exercising the option could be $1.4 billion.
EDF has said that it believes the option is not exercisable under present circumstances and threatened litigation if Constellation chooses to do so.
Sources told Reuters last month EDF is considering a range of options for its U.S. operations, including selling its stake in Constellation's operating nuclear plants.
A Constellation spokesman could not immediately be reached for comment.
(Reporting by Michael Erman; Editing by Doina Chiacu) Keywords: EDF CONSTELLATION/ (Reuters Messaging: michael.erman.reuters.com@reuters.net +1 646 223 6021) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.