Germany to acquire 30% of Uniper

Germany will acquire 30 percent stake of Uniper, a subsidiary of Finnish state-owned energy company Fortum, said an official press release on Friday.

Fortum, Uniper and the german government have agreed on a comprehensive stabilisation package to provide financial relief to Uniper.

As Germany’s largest importer of natural gas, Uniper has been hit hardest by the curtailments of Russian gas imports, and as a result is under extreme financial pressure.

Uniper’s gas trading activities are critical for Germany’s energy supply and play an important role for the European energy sector.

According to the stabilisation package, the German State will take a 30% equity stake in Uniper SE by subscribing about 157 million new ordinary registered shares at nominal value of EUR 1.70 per share against cash consideration of about EUR 267 million;

The German government has committed to make available further capital of up to EUR 7.7 billion against issuance of mandatory convertible instruments, as and if needed, to address potential losses.

The German state-owned KfW bank will provide Uniper with an additional EUR 7 billion in liquidity support through an increase of its existing credit facility from the current EUR 2 billion to EUR 9 billion.

The German government informs that they intend to introduce a cost absorption mechanism that covers 90% of the losses resulting from higher costs for gas replacement volumes caused by Russian gas curtailments from 1 October.

The German government stands ready to provide further support if Uniper’s accumulated net operating losses due to continuing gas curtailments exceed an agreed total amount of EUR 7 billion.

Such support, if required, is intended to be implemented in a manner that avoids further economic dilution of Uniper’s shareholders.

As per package, Fortum’s current stake of approximately 80% in Uniper will be diluted to 56% on the initial equity injection, at which point Fortum will remain Uniper’s majority shareholder and will continue to consolidate Uniper as a subsidiary.

Earlier this year, Fortum granted significant financial support comprising shareholder loan and parent company guarantees of EUR 8 billion to Uniper.

In consideration of its liquidity support, Fortum will now have the option to convert its existing loan of EUR 4 billion against a portion of maximum 70% of the mandatory convertible instruments subscribed by the German State.

Fortum is consequently in a position to retain its position as the majority shareholder. Fortum’s parent company guarantee of EUR 4 billion will remain in place. In the sequence of repayment, the KfW loans rank senior to Fortum’s loan.

“After intensive but constructive negotiations, we found a solution that in an acceptable way met the interest of all parties involved,” said Fortum’s President and CEO Markus Rauramo.

The stabilisation package is subject to certain conditions, such as the withdrawal of the law suit by Uniper against The Netherlands under the Energy Charter Treaty (ECT), no dividend payments by Uniper and restrictions on the remuneration of Uniper’s Board of Management whilst the stabilisation measures are in place.

The stabilisation package still requires all applicable regulatory approvals, in particular by the European Commission, the confirmation of the investment grade rating of Uniper by S&P Global Ratings as well as approval by a Uniper Extraordinary General Meeting.

Minister for European Affairs and Ownership Steering Tytti Tuppurainen, who is currently deputising for the Prime Minister, considers it important that Fortum, its subsidiary Uniper and the German government have reached an agreement on measures to stabilise Uniper’s situation and secure people’s access to energy in Europe, said a government press release.

“In assessing solutions to the Uniper crisis, the main objective of the State has been to help find a solution in which the State’s ownership value in Fortum is preserved and can develop in the best way possible. According to our assessment, the outcome now reached, which was approved by Fortum’s board after careful consideration and analysis, is the best possible compromise under these circumstances and within this timeframe,”

“My German ministerial colleagues and I had intense discussions about the situation, and I consider it important that the outcome is acceptable to all parties involved. In Finland, the Government’s Ministerial Committee on Economic Policy has expressed its support for the solution,” Minister Tuppurainen says.

Earlier on June 18 Uniper has drawn on its €2 billion credit facility from Germany's state-owned KfW bank.

Minister for European Affairs and Ownership Steering Tytti Tuppurainen on 14 July visited Berlin and discussed the financial difficulties facing energy company Uniper with German Minister for Special Affairs and Head of the Chancellery Wolfgang Schmidt and State Secretary for Financial Market Policy and European Policy Jörg Kukies.

Earlier on July 8, Fortum's subsidiary Uniper seeks German government support.