Nuclear companies confident in crisis
The financial crisis is not expected to have a significant effect on the fortunes of nuclear companies. Areva and Exelon both posted results today, putting faith in the strong fundamentals of their businesses.
The financial crisis is not expected to have a significant effect on the fortunes of nuclear companies. Areva and Exelon both posted results today, putting faith in the strong fundamentals of their businesses.
Exelon, the largest nuclear power generation company in the USA and among the world's largest, said it had been affected by the collapse of Lehman Brothers. Exelon had some accounts deemed receivable under the Lehman Brothers bankruptcy filing.
Without detailing the scale of the matter, the company said it had established a reserve relating to Lehman Brothers, and this would contribute to operating and maintenance expenses.
It also made clear that a certain credit facility had disappeared with Lehman Brothers. However, Exelon holds agreements with 24 other banks which total some $7.3 billion in available credit. Of this, Exelon has only drawn on $500 million, leaving $6.8 billion available.
On 20 October the company launched a $6.2 billion offer to take over another US generator, NRG, which had seen its stock price slide on concerns over its liquidity. A similar move was made by MidAmerican Energy to take over Constellation when its share price tumbled in mid-September.
Another effect of the plunging stock markets has been a decision by Exelon's board to "defer indefinitely" any share repurchase initiatives, including a $1.5 billion program authorised on 2 September. It cited "developments in recent weeks affecting the world economy and commodity markets, including those for electricity and gas; the continued uncertainty in capital and credit markets and the potential impact of those events on Exelon's future cash needs."
Meanwhile, Paris-based Areva, the world's largest nuclear technology and services company, announced its third-quarter results, declaring "The group has not been affected by the solvency and liquidity crisis of the banking system." However, it did say that uranium trading operations had been curtailed "drastically" due to the downturn in uranium spot prices, caused in part by struggling finance companies dumping uranium to raise cash.
Areva concluded: "In the Nuclear business, the group does not expect its growth to be significantly penalised by the current economic crisis due to the geographic diversity of its installed base and the soundness of the fundamentals underlying the nuclear revival."
Exelon said: "Our third quarter earnings reflected certain unusual events, including several related to the nation's economic turmoil. The results also demonstrate, however, the underlying strength of the operating performance at Generation."
