Uniper SE has agreed to the terms of a German government rescue package which will allow Berlin to get a 30 percent stake in the energy giant.
“Today, the Federal Government, Uniper SE and [Finnish state-owned energy company] Fortum Oyj have agreed on a stabilization package. The package comprises a capital increase of approximately €267 million for an issue price of €1.70 per share excluding shareholders’ subscription rights,” the company said in a press release Friday.
Uniper will also receive access of a state loan in tranches of up to €7.7 billion in mandatory convertible bonds as needed to cover potential losses, with these bonds to eventually be converted into shares. Additionally, German state-owned investment bank KfW will expand its credit line to the energy company from €2 to €9 billion. Berlin is also required to provide additional support if Uniper’s losses for the year exceed €7 billion.
Fortum’s share of Uniper, which currently stands at roughly 80 percent, will drop to about 56 percent as a consequence of the agreement.
Chancellor Olaf Scholz confirmed later in the day Friday that a bailout deal had been reached, telling reporters that the “solution is that we acquire a 30 percent stake in Uniper, we will buy the company’s shares for a nominal value.”
Uniper, which has traditionally served as Germany’s largest importer of Russian natural gas, was forced to dramatically downgrade its financial outlook in recent months in the face of the sharp drop in imports of Russian energy and the need to purchase more expensive foreign gas due to Western sanctions and other restrictions.
Gazprom cut its natural gas exports to Germany via Nord Stream 1 - one of the last remaining routes for Russian gas to Europe at the present moment, to 40 percent of capacity in mid-June amid scheduled maintenance and a spat with Canada, which blocked the return of a Siemens turbine over sanctions.
Gas sent via Nord Stream 1 was shut down completely for ten days this month for scheduled summer maintenance before resuming Thursday.
Uniper requested state assistance on July 8, with German Economy Minister Robert Habeck vowing to support the company amid fears that it could go bankrupt and drag the entire European energy sector down with it. The company’s shares have tumbled over 70 percent this year, and dropped another 16 percent on Friday on news of the partial government takeover.
Uniper was formed in 2016 as part of the reorganization of E.ON, another Germany-based energy giant, taking over its fossil fuels assets.
Germany and other European countries have been hit hard by a partially self-inflicted calamity of rising energy prices and oil and gas shortages following a series of measures taken by Brussels aimed at cutting dependence on Russian energy.
This week, the European Commission proposed setting a target for all EU countries requiring a 15 percent cut in gas consumption from next month until April of 2023.
Some European officials and their US allies have accused Russia of waging an energy war against the EU, alleging that Gazprom’s decision to turn off the taps was deliberate.
On Tuesday, Russian President Vladimir Putin dismissed these accusations, pointing out that recent decisions taken by Brussels, Kiev, and Warsaw to shut down or sanction Russian overland pipelines, plus Ottawa’s refusal to return a refurbished Siemens turbine, were responsible for the current squeeze on gas deliveries.
“So, first one of the routes in Ukraine was shut down, then Yamal-Europe was shut down; now Nord Stream 1, which is one of the main routes – we pump 55 billion cubic meters a year through it...One compressor had to be sent out for repairs. A repaired compressor was supposed to come from Canada, from the Siemens plant in Canada, to replace it. But it ended up under sanctions in Canada…Now we are being told that the unit will be delivered from Canada soon, but Gazprom does not have any official documents yet,” Putin said.
“So, if one more is delivered, fine, we will have two in operation. But if not, only one will be left, and it will pump only 30 million cubic meters per day….How is this Gazprom’s responsibility? What does Gazprom even have to do with this? [The West] cut off one route, then another, and sanctioned this gas pumping equipment. Gazprom is ready to pump as much gas as necessary. But they have shut everything down,” Putin added.