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Cablegate: Partial Privatization of Highway Company Sanef

This record is a partial extract of the original cable. The full text of the original cable is not available.

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.

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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

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