Uniper proceeds with nationalisation

The German Federal Government has acquired a 99% stake in Uniper signalling the gas company’s nationalisation.

The nearly 100% stake was acquired as Uniper and the German government, alongside previous majority holder Fortum, agreed on an amendment to the stabilisation package announced on 22 July 2022 to ensure the ailing company’s stability.

The additional component to the package is right of first offer for Fortum if Uniper decides to sell its Swedish hydro or nuclear business. This right is limited in time until 31 December 2026.

The amended stabilisation package is hoped to enable Uniper to continue to fulfil its system-critical role for energy supply in Germany and contains three elements: capital increase of €8 billion ($7.9 billion), gas surcharge and a credit line from state-owned KfW to meet the company’s liquidity needs.

The capital increase of €8 billion at an issue price of €1.70 ($1.68) per share is planned, excluding shareholders’ subscription rights.

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Uniper previously extended state-owned bank KfW’s credit to €13 billion ($12.9 billion) at the end of August 2022.

KfW will continue providing financing to Uniper according to its liquidity needs.

The potential need for additional financing will depend on when the payment of the gas surcharge is made to Uniper, which is intended to cover costs for the replacement procurement of gas and how Uniper’s margining situation develops.

At the Energy Trading Day in Zurich, Switzerland, Axpo head of business area trading & sales, Domenico De Luca, and Alpiq’s head of trading, Navin Parasram, commented on the announcement: “[We] hope that this crisis [and the act of] governments nationalising companies will not undo 25 years of work from the European Commission on EU markets and that in the end, reason will prevail.”

Fortum’s shares

Shares issued will be subscribed exclusively by the Government, which will also acquire the Uniper shares currently held by Fortum in a stake of approximately 99%.

The credit line provided by Fortum, consisting of a €4 billion ($4 billion) shareholder loan and €4 billion guarantee line, will be replaced by the Government following the acquisition of the Fortum stake.

Fortum will deconsolidate Uniper as of the third quarter of 2022, which is expected to have a positive impact on the group’s equity.

On the agreement, Fortum cites an escalating European energy crisis; the severity of which they claim has made it apparent that the previously agreed stabilisation measures were insufficient.

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“Under the current circumstances in the European energy markets and recognising the severity of Uniper’s situation, the divestment of Uniper is the right step to take, not only for Uniper but also for Fortum,” stated Markus Rauramo, CEO and president of Fortum.

“The role of gas in Europe has fundamentally changed since Russia attacked Ukraine, and so has the outlook for a gas-heavy portfolio. As a result, the business case for an integrated group is no longer viable.”

The agreed transaction is subject to regulatory clearances and an Extraordinary General Meeting in the fourth quarter 2022 to obtain shareholder approval for the stabilisation measures.

Completion is expected by year-end.