US embassy cable - 05PARIS1861

UNCLAS PARIS 001861 
 
SIPDIS 
 
PASS FEDERAL RESERVE 
PASS CEA 
STATE FOR EB and EUR/WE 
TREASURY FOR DO/IM 
TREASURY ALSO FOR DO/IMB AND DO/E WDINKELACKER 
USDOC FOR 4212/MAC/EUR/OEURA 
DHS FOR CPO-NKELLY, TSA, CUSTOMS 
DOT FOR OST S-1 (FLAHERTY) AND S-60 
 
E.O. 12958: N/A 
TAGS: EFIN, ELTN, EWWT, FR 
SUBJECT:  PARTIAL PRIVATIZATION OF HIGHWAY COMPANY SANEF 
 
REFS: A) 04 PARIS 8218 B) 05 PARIS 1781 
 
1. SUMMARY.  The state-owned toll highway company SANEF, the 
third-largest in France, is going public, selling 950 
billion euros in new shares on March 23.  The GOF will keep 
a majority stake in the company as it did in number-one and 
two highway companies ASF and SAPRR.  END SUMMARY. 
 
2.  Prior to his departure, former Finance Minister Herve 
Gaymard had announced France's partial privatization of the 
Northern and Eastern toll highway company SANEF (Societe des 
Autoroutes du Nord et de l'Est de la France) for early April 
2005.  On March 10, current Finance Minister Thierry Breton 
announced plans to advance the date.  SANEF started to sell 
950 million euros in new shares in an initial public 
offering, including 23.9 million shares to institutional 
investors and individuals.  An additional 1.75 million 
shares may be sold to institutional investors if necessary, 
and a maximum of 1.79 million shares will be set aside for 
SANEF's employees. 
 
3.  SANEF sells shares to institutional investors at 
indicative prices of 36 euros to 41 euros each.  Individuals 
will benefit from preferential conditions, paying shares 1 
euro less, and be exempted from bank fees ("droits de 
garde") in the first 18 months.  BNP Paribas, HSBC Holdings 
and UBS AG are taking orders for SANEF's shares from March 
10 to March 22.  SANEF's shares will be quoted on Euronext 
on March 23.  The offering values SANEF at about 3.5-4.0 
billion euros, including 69,734,126 existing shares. 
 
4.  The northern and eastern highways are heavily used and 
profitable.  SANEF's Chief Executive Pierre Chassigneux 
recently said at a press conference that the company's net 
income more than doubled to 97 million euros in 2004 
compared with 2003.  SANEF plans to use funds it will raise 
in the sale to reduce its debt, giving it the possibility to 
return up to 85% of its 2005 profit to shareholders in 2006. 
SANEF's strategy is to increase the number of its automated 
toll collectors, and to upkeep and improve its highway 
network. 
 
5.  SANEF is the third French toll highway company to be 
partially privatized, after Southern highways ASF in March 
2002 and Paris-Rhin-Rhone SAPRR in November 2004 (ref a). 
The GOF still controls ASF with its 50.3% stake, and SAPRR 
with a 70% stake.  The GOF will keep a stake in SANEF of 
more than 70%. 
 
6.  In his March 16 press conference (ref b), Breton 
indicated that SANEF's privatization was "a success" as the 
order book is filled. 
LEACH