Friday, December 5, 2008

The WSJ Does Some Reporting

After yesterday's critical article, it looks like the Wall Street Journal decided to actually hunt for some primary sources that know more then the fact that an industry analyst is supposed to have an opinion -- even if they haven't bothered to read the SEC Documents.

Here is probably a little more then "fair use" of a damn good WSJ piece.

PARIS (Dow Jones)--Electricite de France SA (1024251.FR) is confident that 20 of Constellation Energy Group Inc.'s (CEG) biggest investors share its view that the bid by Warren Buffett's MidAmerican Energy Holdings Co. for Constellation grossly undervalues the U.S. utility, a person close to the French company said Friday.

EDF is offering $4.5 billion for a 50% share of Constellation's nuclear assets whereas MidAmerican is offering $4.7 billion for the whole company. EDF has a 9.5% stake in Constellation, with which it has a joint venture to build nuclear plants in the U.S.

The person, speaking on condition of anonymity, said EDF and the investors that share its view hold around 50% of Constellation's equity. EDF's 9.5% stake cost the French state-controlled utility around $1 billion, the person said.

EDF and its bankers have had no contact with MidAmerican in recent weeks, the person also said. EDF expects the Constellation board to assess EDF's binding offer, which it says values the company at $52 a share, "objectively." The board has already accepted MidAmerican's offer of $26.50 a share when it was on the brink of collapse because of a liquidity crisis.

The person said EDF's offer is good value as it stands, based on conservative market benchmarks. That's before taking into account other factors such as extending the life of Constellation's relatively modern and efficient nuclear reactors, as well as the new nuclear plants it hopes to build, he said.

The person said that when MidAmerican made its bid in mid-September, EDF and its private-equity partners at the time weren't immediately able to come up with a competing, binding offer.

Regarding EDF's agreed GBP12.5 billion takeover of British Energy PLC (BGY.LN), the person said EDF is close to refinancing half of the GBP11 billion syndicated loan it has secured for the bid. EDF will launch a EUR2 billion bond, a CHF1 billion bond and a GBP400 million bond in December.

The refinancing will lower the cost of the British Energy transaction and relieve pressure on some of the banks in the syndicate.

-By Paris Bureau: Telephone: 33 1 4017 1740

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