Constellation Offers to Sell Stake in UniStar, But Won't Link Sale to Put Option

Constellation Energy has offered to sell its 50% stake in UniStar to EDF for $1, but refused to link the sale to Constellation waiving its ability to exercise a put option which would require EDF to purchase a dozen Constellation plants for $2 billion.

In an October 15 letter to Thomas Piquemal, EDF's executive vice president of finance, Constellation Vice Chairman and COO Michael Wallace said that Constellation would convey its 50% interest in UniStar, which includes the land for Calvert Cliffs 3, for $1. "Constellation seeks only to receive reimbursement of $117 million related to Constellation's share of the generic development and design costs for the US EPR [European Pressurized Reactor] incurred to date. This offer represents a small fraction of the $817 million invested by EDF and Constellation in pursuit of building CC3," Wallace wrote.

"Since our proposal will enable you to move forward with CC3 by conveying to you all of our interests in CC3 and UniStar at well below fair market value, we believe that the separate matter of our contractual disagreement over the put option should be addressed separately. That commercial dispute should not be used to hold the prospect of CC3 hostage," Wallace said.

"Unfortunately, market forces have worked against us [in developing Calvert Cliffs 3]," Wallace wrote. "The combination of the lack of a comprehensive energy policy which prices carbon, the issues associated with the loan guarantee, the significant decline in natural gas and power prices and the rising costs of nuclear construction have brought us to this point," Wallace said.