The Media Room

2009/123 (a)

Backgrounder

Restructuring

November 2007

In November, 2007, the Minister of Natural Resources announced a review of Atomic Energy Canada Limited (AECL) to determine whether AECL's structure as a Crown Corporation best equips it, its employees and ultimately the Canadian nuclear industry to participate fully in the expanding global nuclear market. The review was conducted by the AECL Review Team at Natural Resources Canada, in consultation with the Department of Finance and the Department of Justice, and with the collaboration of AECL. External financial advice was provided by National Bank Financial.

May 2009

In May, 2009, the Minister of Natural Resources announced that the review was completed, and that the Government of Canada would be moving ahead with the restructuring of AECL.
The review found that AECL's mandate and structure hampered its success and development and did not maximize benefits for Canadians and Canada's nuclear industry.

The review noted the distinct mandates, and resource and management needs of the two halves of AECL: the CANDU Reactor Division and the Research and Technology Division, the latter of which includes Chalk River Labs (CRL) and the National Research Universal reactor (NRU). The review concluded that the CANDU Reactor Division is too small to establish a strong presence in the high growth markets that are a key to its success, and that the activities of the Research and Technology Division, while meeting essential public policy requirements, can be managed in a more focused manner and still provide for innovative approaches.

The review concluded that AECL should be restructured, and that:

  1. The business model for AECL must be changed to allow Canada to fully participate in the nuclear industry's global expansion. Successful participation in the commercial reactor business requires global scale to leverage AECL's technology, skills, experience and capabilities. Strategic investors could bring new opportunities to the restructured business and the entire Canadian nuclear industry.
  2. Chalk River Labs similarly would benefit from a strong partner to drive innovation and renewal, while ensuring safe and reliable operations. Due consideration should be given to a government-owned/company-operated approach in which ownership of the existing facilities and the policy mandate and funding would rest with the Government, with the operation of those facilities contracted to one or more third parties through a competitive process.

N.M. Rothschild and Sons was engaged to develop a restructuring plan and to provide external financial advice. David Leith was also engaged as Advisor to the Minister to assist in this project and to work with Natural Resources Canada, AECL and the Government's financial advisors.

December 2009

On December 17, 2009, taking into consideration analysis and advice provided to her, the Minister of Natural Resources Lisa Raitt announced a significant step forward in the Government of Canada's plan to restructure AECL. Investors are invited to submit proposals for AECL's commercial CANDU Reactor Division.

Proposals will be assessed based on how well they meet the Government of Canada's nuclear policy objectives to:

  • ensure safe, reliable and economic options to address Canada's energy and environmental needs;
  • control costs to the Government while maximizing the return on the Government's investment in nuclear energy; and
  • position Canada's nuclear industry and its workforce to seize domestic and global opportunities.

The decision to seek strategic investment was made in order to help the CANDU Reactor division strengthen its global position, access opportunities around the world, and reduce the financial risks carried by taxpayers, all at a time of global nuclear expansion. Such investment will serve to strengthen Canada's nuclear industry so that it can retain high-skilled jobs and create new job opportunities in the future.

The announcement will not affect AECL's Research and Technology Division, which includes the Chalk River laboratories. The top priority continues to be re-starting the National Research Universal reactor as quickly as possible, while maintaining the highest standards of safety and security. The Government will make a decision at a later date on the best management structure for that Division.

The Government of Canada has reiterated it will continue its role in maintaining safety, security, and environmental stewardship in all aspects of the nuclear industry. Canada's nuclear regulator, the Canadian Nuclear Safety Commission, will continue to oversee the entire nuclear industry in this country.

Investors interested in submitting proposals should contact N.M. Rothschild and Sons:

Peter Teti

Director
Tel: +1 (416) 369-2656

Fax: +1 (416) 864-1261

E-mail: peter.teti@rothschild.com

Simon Pratt

Vice President
Tel: +1 (212) 403-3604

Fax: +1 (212) 403-5474

E-mail: simon.pratt@rothschild.com