* Subscription price of 6.35 euros per share
* Subscription ratio 3 new shares for 10 existing shares
* Shares down 89 pct on all-time high, 70 pct on 2005 IPO
* CEO says times difficult but share has capacity to rebound
(Adds CEO comments, share price performance)
By Geert De Clercq and Sudip Kar-Gupta
PARIS, March 7 French state-owned utility EDF
launched a planned 4 billion euro ($4.2 billion)
capital increase on Tuesday as its shares traded near all-time
The French government confirmed it will contribute 3 billion
euros, but EDF will seek to sell another billion worth of new
shares into equity markets. The operation will finance the
utility's development for the next three years.
Chief Executive Jean-Bernard Levy told financial daily Les
Echos that EDF would try to find new long-term shareholders and
that it had met with French, British, German and U.S. investors,
to whom it would present the operation in coming days.
The utility will also launch a campaign to convince its
800,000 French individual shareholders to buy equity.
EDF shares fell to an all-time low of 8.83 euros in
mid-January due to low power prices and a series of unexpected
closures of its French nuclear plants for safety reasons, which
weighed on electricity production.
At Monday's 9.62 euro close, the shares were down 89 percent
on their 86.45 euro 2007 high, and down 70 percent on their 32
euro IPO price in 2005.
"We are going through a difficult time right now, but the
share has a strong capacity to rebound," Levy said.
EDF shares traded 0.7 percent lower by 1100 GMT.
EDF said the subscription ratio for the rights issue would
be three new shares for 10 existing shares, with a subscription
price of 6.35 euros per share, a discount of 34.5 percent on
Monday's closing price.
EDF shareholders will receive one preferential subscription
right per share. Trading in the rights will run from March 8-17.
Levy said that as a result of the operation, the French
state, which holds 85.6 percent of EDF stock, will see its stake
reduced to 84.5 percent.
He added that the combination of the capital increase and
stock dividends on the 2015, 2016 and 2017 financial years would
add up to an 8 billion euro boost to EDF's capital.
He also said that as long as EDF shares' free-float remains
modest, it was unlikely that EDF would return to the French
bourse's CAC 40 benchmark index.
Last month, EDF pledged to deliver positive cash flow next
year before it has to invest in upgrading its ageing French
nuclear plants and build new reactors in Britain.
($1 = 0.9447 euros)
(Writing by Geert De Clercq; Editing by Randy Fabi and Dale