By Valentina Za, Elisa Anzolin and Andres Gonzalez
MILAN/LONDON (Reuters) -EDF has been in contact with potential advisers that may assist the French power giant to review strategic options for its Italian subsidiary Edison as it seeks ways to cut debt after a record loss, two sources said. While a decision over Edison's future is expected only later this year, EDF (EPA:EDF) has started informal discussions with banks jostling for an advisory role, the sources told Reuters.
The sources said various options were being considered for Edison, which one senior energy industry source said could be valued at 7 billion to 9 billion euros ($7.4 billion-$9.5 billion).
The sale of a minority holding has gained ground as an alternative to a full blown sale, one of the sources said, adding that preparations for a divestment could start in earnest in the third or fourth quarter.
EDF, which is in the process of being fully nationalised, is under pressure from the French government to fix its finances. In a December letter seen by Reuters, Prime Minister Elisabeth Borne gave EDF's new government-appointed CEO Luc Remont six months to come up with a strategic plan for the utility and the group has been expected to look at how it could extract value from Edison as part of that overhaul.
EDF declined to comment. Edison was not immediately available for comment.
Given the size of the deal EDF is expected to hire more than one adviser, the two sources said.
Edison, which has been owned by EDF since 2012, produces and distributes electricity from traditional and renewable sources and is on course for record earnings in 2022-2023.
When asked in February about the fate of EDF's foreign operations, Remont said it would be a mistake for the group to sell international businesses that were making a positive contribution to its earnings just because it faced a challenging situation at home. But he also said the group did not need to own 100% of its assets to develop their business. An initial public offering of Edison is among the options under consideration but is seen as less likely than a sale, one of the sources said. Separately, another three people close to the matter said another move also being considered is the sale of Edison's gas storage business in Italy, which would fit the Italian government's energy security strategy. State-controlled Italian gas grid firm Snam has already said it would be interested in the asset if it was up for sale.
EDF slumped to a net loss of 17.9 billion euros ($19 billion) in 2022, hammered by an unprecedented number of outages at its nuclear reactors. Its net debt rose to 64.5 billion euros from 43 billion a year earlier.
Remont has promised significantly better results for this year, but the group must also fund big investments of 33 billion euros through 2028 on its existing reactors, while a plan announced by French President Emmanuel Macron to build six new reactors by 2050 is expected to cost 52 billion euros.
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