Uniper’s stabilization deal is the best it can get

MINISTER for the management of European affairs and the appropriation Tytti Tuppurainen (SDP) said on Friday that Finland, Germany, Fortum and Uniper had reached the best possible deal on a bailout for Uniper, a Dusseldorf-based, natural gas-dependent subsidiary of Finland’s Fortum.

“The key was to find an agreement that all parties could accept and which preserves European, and therefore also Finnish, security of energy supply,” she commented during a press conference on Friday.

Fortum revealed on Friday that the nearly €15 billion stabilization package consists of three main elements.

The German state will take a 30% stake in the struggling energy group by subscribing around 157 million new shares at a nominal value of 1.7 euros per share. Germany has also committed to making available to the company up to €7.7 billion of capital against the issuance of mandatory convertible instruments. KfW, a German public investment bank, has pledged to provide around seven billion euros of liquidity support by increasing its existing credit facility from two to nine billion euros.

While Fortum will remain Uniper’s largest shareholder, its stake will drop from 78% to 56% as a result of the package.

Markus Rauramo, Fortum’s CEO, said the bailout is a major step in restoring a stable footing for Uniper and Fortum. However, further efforts will be needed to establish a long-term sustainable basis for Uniper’s gas business.

Tuppurainen stressed on Friday that the deal fulfills the fundamental objectives of ensuring that no taxpayer money is required for the bailout and that Fortum does not have to inject capital into Uniper. There remains a possibility, she conceded, that the struggling company will inflict more costs on taxpayers in the future.

“What will happen in the future remains to be seen. We are still in a difficult situation. We are by no means in calm waters. On the contrary, Russia continues to wage an energy war against Europe.

She said a key feature of the deal is that it limits the risks that energy policy decisions in Germany might create for Fortum. Uniper had to sell natural gas at prices below its acquisition prices due to the limited availability of affordable natural gas from Russia. The deal, however, allows the company to pass on up to 90% of the higher acquisition prices to its customers from October.

The German government has pledged to cover any losses over seven billion euros resulting from the waiting period. The additional financial support will not reduce the stakes for the current owners.

Tuppurainen said Finland considers it important that German consumers start paying higher market prices for natural gas because of the impact not only on Fortum, but also on the green transition in Europe.

Uniper’s hydro and nuclear assets, she also recalled, continue to make the company valuable to Fortum and the Finns.

Rikka Purrathe chairman of the Finnish Party, considered that the agreement signaled the partial nationalization of Uniper.

“How could they accept this kind of primacy for German loans? she asked. “It would be reasonable to require that the current owners of Uniper have the possibility of recovering their shares at these same prices once the acute crisis has passed.”

Aleksi Teivainen – HT

About Andrew Estofan

Check Also

Soaring inflation and stagnant wages are eroding citizens’ purchasing power

JASIM UDDIN HAROON | Published: August 08, 2022 08:24:32 | Updated: 08 August 2022 16:08:51 …