Friday, October 03, 2008
Plans For 3rd Nuclear Plant at Calvert Cliffs Looking Better
It is being reported that French firm Electricite de France (EdF) is partnering with Kohlberg Kravis Roberts & Company (KKR) to make another run at purchasing Constellation Energy Group. EdF lost the bid for Constellation to Warren Buffet even though EdF's bid was higher. We believe EdF is much more likely to build a third reactor at Calvert Cliffs than Warren Buffet (MidAmerican Energy Holding Co/Berkshire Hathaway, Inc). Warren Buffet decided against building a reactor in Idaho for economic reasons. The KKR partnership will strengthen EdF's hand because a foreign firm cannot be the principal owner of an American nuclear power plant. EdF already owns a 9.5% stake in Constellation. What? EdF prefers working with KKR to Warren Buffet? Evidently.
EdF/KKR better hurry because Buffet is already pursuing an 'application for indirect license transfer' from the Nuclear Regulatory Commission. We guess that transfer will have to be redirected if KKR/EdF is successful in getting their bid accepted. Constellation shareholders have sued the company for accepting the $26.50 a share offer from Buffet compared to the $35 a share offer from EdF.
France is committed to nuclear power, where about 80% of the electricity is generated by the neo-green technology. EdF and Areva not only build and operate nuclear plants, they also recycle spent fuel for reuse. We are excited by this new development and if there is anything we can do to facilitate it, please give us a call. (The Wall Street Journal, 10/3/08)