EDF close to launching sale of its distribution arm

The sale timeline for its three British distribution network operators (DNOs) has slipped due to management changes at EDF and a ruling by the British regulator in December that revalued the multi-billion euro unit.

Before bids are accepted, Proglio, who left water group Veolia to take over EDF in November, hopes to lure Thomas Piquemal, Veolia's finance director, to become EDF's new finance chief.

"Proglio wants to bring in his team, especially Piquemal, so he can take a look at it (the sale) before he makes any big decisions," said a banker close to the deal. Piquemal advised Proglio in his capacity as an investment banker for Lazard.

"Piquemal has a strong reputation among investors and is very well regarded by the markets," said a Paris-based analyst.

Several sources said a detailed information memo on the sale of the networks was expected to go out at the end of January or at the latest, the beginning of February. First-round bids are likely due in late March or April.

EDF, the world's largest single generator of nuclear power, is hoping to get more than 4 billion euros ($6bn) for the networks to help cut its debts.

The networks deliver electricity to more than 20 million Britons and generated earnings before interest and tax, depreciation and amortisation (EBITDA) of about 700 million euros in 2008.

They are part of EDF's UK arm, EDF Energy, which also operates eight nuclear power stations and supplies energy to 5.5 million retail customers.

The other parts of EDF Energy are not included in the sale.

Regulator Ofgem ruled in December it would restrict post-tax returns on capital at the network and would review merger policy by mid-2010.

The news caused EDF rival Scottish & Southern Energy, which already owns two of Britain's 14 networks and had said it was considering an offer alongside Canada's Borealis, to say it would reconsider its bid plans.

Bankers close to the deal said it was too early to say who would bid and many investors were waiting to see what kinds of financing is available.