Germany nationalizes Uniper to prevent bankruptcy

On Wednesday, the German government announced it had agreed to nationalize generator Uniper to prevent the company from collapsing.

The German government plans to increase its stake in the company to 98.5% at a price of €1.70 ($1.68) per share. The deal will also invest €8 billion ($7.9 billion) of government funds in his Uniper. His €4 billion of Uniper’s stake will pay off a loan from his Finland-based parent company Fortum.

State-owned bank KfW will provide bridge financing for the transaction, which is expected to be completed by the end of 2022.

Markus Rauramo, CEO of Fortum, said:

“Since Russia attacked Ukraine, the role of gas in Europe has fundamentally changed, as has the outlook for gas-intensive portfolios. As a result, the business case for a combined group is no longer viable. There is none.”

The company, which has about 33GW of generating capacity, posted a loss of €12 billion ($11.9 billion) in August. Russia had significant assets, including approximately 8,215MWe of electricity from three petrol stations and mining projects.

Uniper also provided financing to finance the now-cancelled Nord Stream 2 pipeline. The company canceled those investments as a result of economic sanctions imposed by Western countries following Russia’s invasion of Ukraine.

After the announcement, Uniper’s share price fell about 35% on the German market and recovered about 10% before the close.

Uniper CEO Klaus-Dieter Maubach also supported the move, saying the deal “clarifies our ownership structure so we can continue to operate and serve as an integral energy supplier to the system.” will be,” he said.

Nationalization is expected to be the first of several

German Economy Minister Robert Habeck said at a press conference:

“Storage levels are above 90% and gas prices have fallen below €200/MWh after a short-term spike. Half of Uniper’s portfolio is in Russian gas, which accounts for 40% of German gas supply. These factors combined to force us to act.”

In July, the German government bought 30% of the company, and negotiations on long-term measures have continued since then. Fortum’s recent statement said, “Since July, the European energy crisis has further escalated and the severity of the situation has made previously agreed stabilization measures inadequate and difficult to implement. It became clear.”

Earlier this year, Germany changed laws allowing the nationalization of energy companies to prevent disruptions to the country’s electricity supply. Under similar provisions, she seized three Russian-owned oil refinery assets earlier this month.

This also follows the full nationalization of EDF in France. The French government had control of her EDF, but the government bought the remaining shares so the company could take on debt and keep energy prices low.

Werner Heuer, president of the European Investment Bank, said on Tuesday: bloomberg: “There may be more of this because states have to get in, given incredibly high energy prices that can’t be passed on to consumers. This is something we’ll probably see for a while.”