Russia issues decree to seize Fortum’s assets worth €1.7b

Russia has issued a new presidential decree which enables the authorities to temporarily seize the assets of Finnish majority state-owned energy company Fortum in Russia, said Fortum in a press release on Wednesday.

The assets owned by certain foreign entities in Russia.

Fortum has not received official confirmation from the Russian authorities and the company is currently investigating the situation.

The Russian Federal Agency for State Property Management, Rosimushchestvo has been appointed as an interim asset manager, which exercises the powers of the owner, but has no right to dispose of the property, said Fortum referring to a press release of Rosimushchestvo.

Fortum’s current understanding is that the new decree does not affect the title (registered ownership) of the assets and companies in Russia.

However, it remains unclear how this affects Fortum’s Russian operations or the ongoing divestment process.

In the decree, temporary management was introduced in relation to Fortum’s shares in the Russian subsidiary PAO Fortum (Fortum JSC).

The book value of Fortum’s holdings (including holdings in TGC-1) in Russia was EUR 1.7 billion as of 31 December 2022.

Later, Fortum has been made aware through a release by its Russian subsidiary PAO Fortum (Fortum PJSC) that the company’s Board of Directors has replaced the CEO.

According to the release the decision was taken in accordance with the requirement of the Federal Property Management Agency dated 25 April 2023.

Fortum considered the appointment of the new CEO to be confirmation that the new Presidential decree is being enacted and Fortum’s subsidiary has been put under temporary asset seizure.