TheChek News Flow

Cost of Sizewell C nuclear project expected to rise close to £40bn

Final price tag for building new power plant is likely to be double 2020 estimate

The final price tag for building the planned Sizewell C nuclear power station in Suffolk is likely to reach close to £40bn, according to people close to the negotiations over the flagship energy scheme. 

The sum is double the £20bn estimate given by developer EDF and the UK government for the project in 2020, reflecting surging construction costs as well as the implications of delays and cost overruns at sister site Hinkley Point C. 

The higher estimate is likely to raise questions over the government’s strategy for a nuclear power revival, at a time of stretched government finances and cost of living concerns. 

EDF says that once up and running, Sizewell C should be able to supply low carbon electricity to the equivalent of about 6mn homes for 60 years.  

The Treasury is due to decide whether to go ahead with the project in this year’s multiyear spending review, according to officials. 

The UK government and French energy group EDF were the initial backers of Sizewell C but they are trying to raise billions of pounds from new investors, a process that is dragging on longer than planned.  

Earlier this month the Department for Energy Security and Net Zero (Desnz) said it could not reveal the current cost estimate for the project as it was “commercially sensitive”. 

But one senior government figure and two well-placed industry sources said that a reasonable assumption for the cost of building Sizewell C would be about £40bn in 2025 prices.

The government has already awarded £3.7bn of state funding to the project. Ministers had planned to reach a final investment decision by the end of 2024 but were forced to delay this until spring 2025. Now there is industry speculation that any deal could slip beyond the autumn.

Potential investors in Sizewell C include Centrica, Schroders Greencoat, Emirates Nuclear Energy Corporation and Amber Infrastructure Group.

According to accounts published at Companies House last week, Sizewell C is “continuing to make good progress in negotiations with private investors”.

Alison Downes, executive director of campaign group Stop Sizewell C, urged the government to “come clean” on the “massive true cost” of the project given that households would be paying upfront for its construction via a levy on energy bills. “This secrecy around Sizewell C is inexcusable.”

Dale Vince, a big Labour party donor and founder of green energy company Ecotricity, has written to the government’s new Office for Value for Money warning that the construction of Sizewell “will saddle consumers with higher bills long before it delivers a single unit of electricity”. 

Speaking to the Financial Times, he added: “Nuclear is too expensive, too slow — and very expensive to contain at the end of its life.”

Nuclear power currently supplies about 14 per cent of the UK’s electricity and many experts say it will be critical to push to cut carbon dioxide emissions to net zero by 2050.

However, all but one of Britain’s current ageing fleet of plants is due to close by March 2030, potentially sooner if planned life extensions cannot go ahead. 

Only one new nuclear power station, Hinkley Point C in Somerset, is currently being built in the UK but it is delayed and over budget.

The project is due to start generating in 2029 at the earliest, and cost up to £46bn. That compares to initial expectations from 2016 that it would start at the end of 2025 and cost £18bn. 

Sizewell C uses the same European Pressurised Water technology as Hinkley Point C. EDF has said Sizewell C should be much cheaper partly because lessons will have been learned and supply chains will be more developed. 

It is also being built using a different financial structure, the regulated asset base model, which is used in the water sector including to finance the new Thames Tideway sewage tunnel. Developers start getting paid during construction from consumers’ bills, rather than having to wait for the plant to be finished.  

But there is scepticism inside government about how much lower Sizewell C’s price tag would be compared to Hinkley Point C.

Progress on the project has partly been knocked by the recent resignation on health grounds of Rob Holden as chair of Sizewell C Limited. 

A spokesperson for Desnz said he did not recognise the “speculative” figure of £40bn for the cost of Sizewell C. 

“The project is expected to reduce the cost of the electricity system, boost our supply of secure homegrown power and generate major investment nationwide.”

Bill Ackman’s plan to become baby Buffett

Bill Ackman has a lot of balls in the air.

A few years ago he invented Pershing Square SPARC Holdings, a listed “special purpose acquisition rights” company aimed at eventually taking a large prominent company such as Elon Musk’s X or SpaceX public.

Ackman also wants to take his hedge fund Pershing Square public and last year attempted to raise a $25bn fund in the US.

Now the billionaire investor is taking his dreams a step further, stating on Monday that he plans to recreate his own Berkshire Hathaway from a hodgepodge of real estate assets that have languished on public markets for a decade.

On Monday, Ackman unveiled a more than $1bn deal for Pershing Square to take control of Howard Hughes Holdings, a real estate developer he created in 2012 from the carcass of mall operator General Growth Properties.

Under his control, Ackman aims to turn Howard Hughes into an acquisition vehicle that uses its cash flows and balance sheet to buy other public and private companies.

Ackman said the gambit was part of his efforts to build a “modern-day Berkshire Hathaway”.

The billionaire investor has always dreamt big and promised epic returns from his financial alchemy.

A decade ago, he fixated on “platform companies”, where an acquisitive chief executive could conjure blistering returns from flipping companies. Unfortunately, during that obsession he bet billions on Valeant Pharmaceuticals. But instead of a 45x return, Pershing Square lost billions.

Now an ascendant keyboard warrior on X and vocal backer of president-elect Donald Trump, Ackman is aiming to seize the moment by transforming Pershing Square into a large financial group with the capacity to compete with powerful private equity buyers on large takeovers, starting with his takeover of Howard Hughes.

Afterwards, he aims to revive his US fundraise, which was pulled last year after raising less than 10 per cent of the $25bn Ackman targeted, and eventually will take his firm public.

It all sounds exciting on paper, but Ackman has a history of coming up short.

Can Howard Hughes really generate much cash? It hasn’t for its decade-long history. It’s even unclear if Howard Hughes shareholders will accept Ackman’s $85-per-share purchase price.

In a presentation on Monday, Ackman pointed to Pershing Square’s “long-term track record in raising equity capital from institutional and retail investors”, and mentioned a record-sized $4bn acquisition vehicle he raised in 2020.

Left unsaid was that the vehicle was unwound two years later due to regulatory complications — just another in a long line of Ackman dreams left unfulfilled.

Stephen Miran, nominated to advise Trump, has suggested high tariffs could be the price allies pay for U.S.’s defense umbrella

To serve as an economic adviser to Trump, it helps to share his belief that tariffs make the U.S. richer. Not many economists meet that criterion.

Stephen Miran has made just that case. Miran, nominated to chair Trump’s Council of Economic Advisers, has written that the U.S. could be better off with average tariffs of around 20% and as high as 50%, compared with the current 2%.

Miran’s views are worth studying, and not just because he’s going to advise Trump. He has described tariffs as a tool, and international intervention to weaken the dollar as another, that could address a longstanding global tension: the U.S.’s economic and military support for other countries have contributed to an overvalued dollar, wide trade deficit and hollowed-out industrial base.

“Sweeping tariffs and a shift away from strong dollar policy can have some of the broadest ramifications of any policies in decades, fundamentally reshaping the global trade and financial systems,” Miran wrote in a November report for Hudson Bay Capital, where he is senior strategist.

Miran wrote the report “A User’s Guide to Restructuring the Global Trading System” before he was named in late December as Trump’s choice to chair the CEA, the White House’s in-house economic think tank.

The report, Miran wrote, reflected his views, not Trump’s, and is intended not as policy advocacy but to “understand the range of possible policies that might be implemented.”

Miran, 41, earned his Ph.D. in economics from Harvard University in 2010 and he has since worked in financial markets and is a fellow at the conservative Manhattan Institute.

While novel, his arguments—including for tariffs—are grounded in orthodox economics. Miran is not a contrarian who assumes “all academics must be wrong,” said David Cutler, a Harvard economist who served in the Clinton administration and was one of Miran’s Ph.D. advisers. He’s “guided by the theory and evidence.”

That doesn’t mean his proposals would work. His report acknowledges a high risk that they won’t: “There is a path by which these policies can be implemented without material adverse consequences, but it is narrow.”

Economists agree that trade enables a country to both consume and produce more, and tariffs leave it worse off. Yet in the decades after Adam Smith made the definitive case for free trade in 1776, economists identified conditions under which a country might be better off imposing a tariff.

Suppose an importer is a monopsonist—a dominant enough buyer to influence the price it pays (just as a monopolist influences the price at which it sells). It could impose a $10 tariff on an imported widget, and its price, instead of rising $10, would stay the same because the exporter lowered its own price by $10 to avoid losing market share.

So consumers are unscathed. Even if they pay a bit more, that might be more than offset by tariff revenue. The rate that maximizes this net benefit is called the “optimal tariff.” Miran cites research by Arnaud Costinot of the Massachusetts Institute of Technology and Andrés Rodríguez-Clare of the University of California, Berkeley, that a tariff of around 20% is optimal, and up to 50% could still leave the U.S. better off.

This represents an argument for higher tariffs as a goal in and of themselves, in contrast to some Trump allies’ defense of tariffs as a negotiating tactic.

An optimal tariff policy is explicitly “beggar-thy-neighbor”: one country benefits only by hurting another. Since World War II, as the world pursued reciprocal tariff reductions, “it’s hard to find real life examples of countries motivated to pursue it in a systematic, and deliberate, way,” said Doug Irwin, a trade historian at Dartmouth College.

Optimal tariff theory has some real-world drawbacks. It doesn’t seem borne out by Trump’s tariffs on China. In an interview, Costinot noted that studies found the tariffs were mostly passed through to American importers. (Miran’s report disputed those studies.)

f other countries retaliate, as China, the European Union, Mexico and Canada did in 2018, the tariff is no longer optimal: Both sides lose. “Retaliatory tariffs by other nations can nullify the welfare benefits of tariffs for the U.S.,” Miran acknowledged.

To deter retaliation, he wrote that the Trump administration could “declare that it views joint defense obligations and the American defense umbrella as less binding or reliable for nations which implement retaliatory tariffs.” In other words, the U.S. might not defend Japan, South Korea or a fellow NATO member that retaliated.

Another problem: Tariffs only leave the U.S. better off if import prices barely rise. But in that case, consumers have no incentive to switch from imported to domestic goods, which nullifies Trump’s aim of boosting American manufacturing.

Yet another caveat is that tariffs might not reduce the trade deficit because the dollar rises in response, which makes imports cheaper and exports less competitive.

As an alternative to tariffs, Miran said the U.S. could weaken the dollar through a “Mar-a-Lago Accord,” modeled on the 1985 Plaza Accord in which the U.S. and its allies jointly acted to drive down the dollar. “After a series of punitive tariffs, trading partners such as Europe and China become more receptive to some manner of currency accord in exchange for a reduction of tariffs,” he wrote. Or, the U.S. could impose a user fee on buyers of Treasury debt.

If this triggers selling of long-term bonds, the Federal Reserve might have to buy them to limit upward pressure on long-term interest rates, Miran wrote. The Fed is more likely to cooperate with the Treasury on currency and bond interventions in return for independence on monetary policy, he wrote. (Trump has demanded more say on monetary policy. Miran has elsewhere proposed the president and state governors have more control over the Fed’s governance.)

A major question is whether a threat to withhold the defense umbrella from countries that don’t cooperate would be effective. The U.S. has no defense alliance with Mexico, Vietnam or China which account for half the U.S. trade deficit.

On Tuesday, Trump declined to rule out military force to pry Greenland from Denmark, and that he would use “economic force” to annex Canada. Both are fellow NATO members. Allies may conclude from Trump’s repeated threats against them that the U.S. defense guarantee no longer exists. Russia and China may draw the same conclusion, and seize the opportunity to increase aggression against their neighbors.

Miran himself dryly acknowledged “potentially volatile…consequences.”

La marque aux 300 points de vente doit passer par une procédure de sauvegarde accélérée pour avaliser sa restructuration financière et éviter l’impasse de trésorerie.

Le bout du tunnel n’est peut-être plus très loin pour Ba&sh. Fragilisée par une forte baisse de sa rentabilité entre 2022 et 2023 (-35%), l’enseigne de mode aux 300 magasins n’est pas passée loin de la faillite. Pour éviter la catastrophe, la chaîne a du arracher une bouffée d’air à ses créanciers en ouvrant des négociations en mai 2024 sous la protection du tribunal de commerce de Paris - dans le cadre d’un mandat ad hoc, puis d’une conciliation dès juillet. Des discussions fructueuses puisqu’un accord de principe autour d’un plan de restructuration financière a pu être trouvé. Reste maintenant à l’entériner formellement, dans le cadre d’une procédure de sauvegarde financière accélérée*, comme l’a révélée le site Fashion Network. L’Informé s’est procuré les détails du plan envisagé : il prévoit des efforts significatifs de la part des actionnaires, en particulier de ses fondateurs et, d’un degré moindre, de la holding HLD (majoritaire), pour soutenir la trésorerie. En contrepartie, les banques et les fonds qui détiennent la dette mise en place pour l’opération de LBO de 2022 consentent à des reports d’échéance.

Dans le cas de Ba&sh, c’est précisément Muse, la société de tête du groupe, qui a été placée en sauvegarde financière accélérée. La papesse des administrateurs judiciaires, Hélène Bourbouloux, est ici à la manœuvre après avoir assumé le rôle de conciliatrice. Créanciers et actionnaires devront s’exprimer en faveur ou non du plan selon le système dit de classes de parties affectées qui, en gros, répartit les prêteurs par groupes en fonction des types de dette octroyée (à hauteur des deux tiers), une majorité de classes devant ensuite approuver le plan. Mais l’issue du vote semble assez certaine : le schéma négocié lors de la conciliation jouit déjà d’un large soutien, puisque les créanciers sont 83 % à l’approuver - une seule banque s’y est opposée : le Crédit Agricole d’Île-de-France. Le plan table sur une progressive hausse de l’Ebitda d’ici à 2027, ce qui le ferait atteindre les 29 millions d’euros. À titre de comparaison, ce résultat ressortait à 37 millions d’euros en 2022 pour 310 millions de chiffre d’affaires. Il était descendu à 23 millions en 2023 (pour un niveau de ventes quasi inchangé).

Concrètement, les actionnaires acceptent de remettre au pot 15 millions d’euros. Les plus gros contributeurs seront les fondatrices Barbara Boccara et Sharon Krief (qui ont donné les premières lettres de leur prénom respectif à la marque) ainsi que l’entrepreneur Dan Arrouas, lui aussi présent depuis la première heure - ils se partagent tous les trois 30 % du capital actuellement. De son côté, HLD, va limiter sa réinjection de cash à 3 millions d’euros. Mais l’effort des actionnaires ne s’arrêtera pas à un apport d’argent frais, puisqu’ils vont également convertir en actions les 55 millions d’euros d’obligations qu’ils avaient mises en place dans le montage du LBO d’il y a trois ans.

De leurs côtés, les banques accepteront d’attendre un peu leur dû : les dettes concernées par le plan, qui s’élèvent 110 millions, ne seront remboursées que d’ici fin 2028. Le report concerne 40 millions de prêts LBO amortissables et 10 millions d’euros de crédits renouvelables contractés auprès de BNP Paribas, du Crédit Agricole d’Île-de-France et du CIC : leur maturité actuelle avait été fixée à mai 2027. Le reste de la dette, soit 60 millions d’euros dus à des fonds de dette d’Eurazeo, Tikehau et Allianz, correspond à un prêt remboursable à leur terme - ces fameuses « tranches B » incontournables dans les opérations de LBO. Le report d’échéance se limite ici à seulement 7 mois, puisque la maturité court aujourd’hui à mai 2028.

Un autre acteur - et pas des moindres - devra lui aussi faire un léger effort, le fonds L Catterton de la galaxie Bernard Arnault. Ce dernier est un ancien propriétaire de Ba&Sh : il avait cédé la majorité du capital de l’enseigne à HLD en 2022. À sa sortie, il avait bénéficié d’un crédit-vendeur de 10 millions d’euros - sorte de facilité de paiement (assortie d’intérêt) permettant à un acheteur de payer plus tard une petite partie du prix d’acquisition. Selon le plan qui sera soumis au vote, le crédit vendeur sera converti en actions de préférence. Ces titres donneront la possibilité à L Catterton de percevoir une partie des produits de cession lorsque Ba&Sh sera revendu dans quelques années (probablement en 2027 ou 2028).

Gapping down
In reaction to earnings/guidance:

Other news:

Gapping up
In reaction to earnings/guidance:

Select healthcare related names showing strength:

Other news: