Press Release dated December 23, 2002
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CCO |
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www.cameco.com |
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2121-11th Street West, Saskatoon, Saskatchewan, S7M 1J3 Canada
Tel: (306) 956-6200 Fax: (306) 956-6201 Web: www.cameco.com
Cameco Increases Stake in Bruce Power
Saskatoon, Saskatchewan, Canada, December 23, 2002
Cameco Corporation today announced that it has signed a binding heads of
agreement (agreement) along with two Canadian partners, TransCanada PipeLines
Limited (TransCanada) and BPC Generation Infrastructure Trust (BPC), a trust
established by Ontario Municipal Employees Retirement System (OMERS), to
purchase 79.8% of Bruce Power Limited Partnership (Bruce Power) from British
Energy plc (BE), which currently holds an 82.4% interest. The Power Workers
Union and The Society of Energy Professionals (unions) will obtain the
remaining 2.6%. In addition, the consortium of Cameco, TransCanada and OMERS
will acquire the 50% interest that BE holds in Huron Wind, Ontarios first
commercial wind farm.
The agreement commits Cameco to purchase, for approximately $198 million
(subject to minor closing adjustments) an additional 16.6% interest in Bruce
Power, bringing its total interest to 31.6%. The agreement protects Camecos
rights with respect to its existing 15% partnership interest, including limits
on future capital and financial assurance requirements. Cameco also confirms
its fuel supply management responsibility to Bruce Power has been retained.
Cameco will also provide $75 million representing its one-third share of $225
million in deferred rent payments to Ontario Power Generation Inc. (OPG) to be
paid concurrent with the closing of the acquisition.
Upon closing, Camecos total commitment in financial assurances is estimated to
be approximately $200 million, related to its share of the operating license
from the Canadian Nuclear Safety Commission (CNSC), the lease with OPG and the power purchase
agreements (PPAs) with large industrial customers. This commitment is subject
to adjustment as the actual amounts of financial assurances in support of PPAs
fluctuate in response to wholesale electricity market changes.
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Cameco will fund the acquisition and the OPG deferred rent payments from cash
and existing credit facilities. As a result, Camecos net debt to
capitalization ratio will increase to about 20% upon closing.
The transaction meets Camecos investment return requirements and is expected
to be accretive to Camecos earnings and cash flow upon closing. Depending on
wholesale electricity prices in the Ontario market, Cameco anticipates after
tax earnings from its total 31.6% share of Bruce Power to be in the $0.90 to
$1.00 per share range in 2003. This forward-looking estimate is conditional on
the following material assumptions:
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establishing the effective date of the acquisition as January 1, 2003 |
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restarting two Bruce A units on schedule (April and June) |
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achieving a combined forecasted capacity factor of 87% |
Other nuclear generation risks that could impact this estimate are described at
the end of this news release.
We have been very pleased with our initial 15% investment in Bruce Power and
we have worked very hard to build, with our partners, this made-in-Canada
solution, said Bernard Michel, chair and chief executive officer of Cameco.
We are delighted to be associated in this transaction with TransCanada and
OMERS, two highly respected, large capitalization investors whose participation
unquestionably strengthens Bruce Power.
Financial close is expected by February 14, 2003, subject to a number of
conditions, including the approval of BEs shareholders, the consent of CNSC,
receipt of favourable Canadian tax rulings and clearance under the Canadian
Competition Act.
It is a further condition of closing that certain senior employees of Bruce
Power not leave the employment of Bruce Power or announce their intention to do
so. We look forward to continue working with Bruce Powers senior operations
team. They have demonstrated great leadership and have achieved impressive
operational and commercial success at Bruce Power, Michel added.
TransCanada and BPC will each acquire a 31.6% interest in Bruce Power. The
unions own a 2.6% interest in Bruce Power and will obtain an additional 2.6% at
closing.
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The resulting ownership of Bruce Power will therefore be as follows:
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Cameco |
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31.6 |
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TransCanada |
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31.6 |
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BPC |
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31.6 |
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Unions |
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5.2 |
% |
With this transaction, Bruce Power will find itself with financially strong
owners and the management team will be able to dedicate its full attention to
the continuing improvement of the power station performance and to the restart
of the two Bruce A reactors, said Michel. Subject to regulatory approvals, the
anticipated restart of Bruce A reactors remains on schedule to meet Ontarios
peak summer demand and is estimated to cost about $400 million.
TransCanada is a leading North American energy company focused on natural gas
transmission and power services. Upon closing, it will own, control or have
under construction 4,150 megawatts of power generation capacity.
BPC, based in Toronto, Ontario, is owned by OMERS, one of Canadas largest
pension funds with $34 billion in assets under management.
Investor Conference Call
Cameco will hold an investor relations conference call on, Monday, December 23,
2002 from 10:00 a.m. to 11:00 a.m. Eastern time (9:00 a.m. to 10:00 a.m.
Saskatoon time) to discuss this agreement.
The call will be open to all members of the investment community. Members of
the media will be invited to listen but not ask questions. In order to join
the conference call on Monday, December 23, please dial (416) 695-9753 or
(877) 888-4210 (Canada and US). An operator will put your call through.
Alternatively an audio feed of the conference call will be available on the
web site at www.cameco.com by using Windows Media Player or Real Player
software. See the link on the home page on the day of the call. Please pass
this invitation to colleagues in your organization who have an interest in
Cameco.
A recorded version of the proceedings will be available:
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on our web site, www.cameco.com, shortly after the call, and |
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on post view until midnight on Monday, January 13 by calling (416)
695-9731 or (888) 509-0082 (no code required) |
News Conference
Cameco will hold a news conference on Monday, December 23, 2002 at 11:00 a.m.
Saskatoon time to discuss this agreement. It will be held at Camecos head
office in Saskatoon at 2121 11th Street West.
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Cameco, with its head office in Saskatoon, Saskatchewan, is the worlds largest
uranium supplier. The companys uranium products are used to generate
electricity in nuclear energy plants around the world, providing one of the
cleanest sources of energy available today. Camecos shares trade on the
Toronto and New York stock exchanges.
Certain statements contained in this news release are forward looking and
reflect Camecos views with respect to the future. Since forward-looking
statements address future events and conditions, by their nature they involve
inherent risks and uncertainties and are not guarantees of Camecos future
performance or results. They are subject to various factors and assumptions
which may cause actual results to differ materially from those expressed or
implied by such forward-looking statements, including, but not limited to,
wholesale electricity prices in Ontario; Ontario electricity rate regulations;
the impact of the sales volume of electricity generated from the Bruce nuclear
units; regulatory initiatives regarding deregulation, re-regulation or
restructuring of the electric utility industry in Ontario; changes in
government regulations and policies; effects of weather and other natural
phenomena; failure to obtain necessary permits and approvals from government
authorities, including an operating license from the CNSC for the Bruce A
units; operating performance of the Bruce nuclear facilities, including the
impact thereon of mechanical, equipment or structural problems; loss of revenue
and increase in costs due to unexpected outages or longer than planned
scheduled outages of any of the Bruce units; nuclear waste management and
decommissioning; success of the planned restart of the Bruce A units and Bruce
Power capacity factor improvement projects; and environmental, safety and
operating risks associated with nuclear power. Some of these and other factors
are discussed in greater detail in Camecos annual information form on file
with the US Securities and Exchange Commission and Canadian securities
regulatory authorities. Although Cameco believes that the assumptions inherent
in the forward-looking statements are reasonable, undue reliance should not be
placed on these statements, which only apply as of the date of this news
release. Cameco is not obligated to update or revise any forward-looking
statements, whether as the result of new information, future developments or
otherwise.
- End -
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For investor inquiries, please contact: |
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For media inquiries, please contact: |
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Bob Lillie
Manager, Investor Relations
Cameco Corporation
Phone:(306) 956-6639
Fax:(306) 956-6318 |
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Jamie McIntyre
Director, Investor & Corporate Relations
Cameco Corporation
Phone:(306) 956-6337
Fax:(306) 956-6318 |
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