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Last Updated: Thursday, 23 June, 2005, 11:36 GMT 12:36 UK
Gaz de France in 4bn-euro float
A worker demonstrating against the Gaz de France share sale
Unions argue that privatisations will weaken workers' rights
France has started the partial privatisation of Gaz de France in what is set to be one of 2005's biggest share flotations.

A 22% stake in Europe's third-largest gas company is being put up for sale to raise about 4bn euros (2.7bn; $4.9bn).

Unions have opposed the sell off, one of three planned in the energy industry over the next 12 months, and there were a number of protests on Wednesday.

France is pressing ahead as it needs cash to cut its rising budget deficit.

French privatisation plans
Electricite de France
100% state owned, with share sale planned for October
Areva
More than 92% of nuclear power firm is owned by state and other public entities, with share sale planned for 2006
Aeroports de Paris
100% state owned, with minority stake set for sale in 2006
Autoroutes du Sud de la France
State owns more than half of the firm and plans to reduce its holding
Autoroutes Paris Rhin Rhone
State owns 70% and will cut holding
Autoroutes du Nord et de l'Est de la France
Almost 76% in French hands, stake to be sold in future
Source: Reuters

It has already clashed with the European Union over the size of its spending shortfall, which must be kept under 3% of annual gross domestic product.

And earlier this week, Finance Minister Thierry Breton warned that the country was living beyond its means at the same time as he cut 2005 growth forecasts to 2% from an earlier target of 2.5%.

However, unions are against the share sale, complaining that it will pave the way for job cuts and the erosion of workers' rights.

Profit split

Under the terms of the share sale, France will sell as many 121.3 million state-held shares priced between 20.70 euros and 24 euros.

Gaz de France also will offer 80.9 million newly created shares as part of the overall deal, using the money to bolster its balance sheet.

The company wants to improve its finances as it looks to head off the challenge from energy giants such as Germany's E.ON and the UK's Centrica.

It's going to be a hit
Jacques-Antoine Bretteil, International Capital Gestion

Early indications from investors is that demand for the Gaz de France offering will be strong, helping both the state and company hit their target.

"It's going to be a hit," said Jacques-Antoine Bretteil of International Capital Gestion.

France will keep an 80% stake in Gaz de France, but has parliamentary approval to sell as much as 30% of the company.

Investors will have from 23 June until 6 July to submit their offers, and the shares are scheduled to start trading on Euronext's Eurolist index from 8 July.


SEE ALSO:
France to privatise energy firms
08 Feb 05 |  Business


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