Uniper in nationalisation talks with German government

Uniper is discussing an equity increase with the German government that would leave Berlin with more than 50 per cent of the struggling energy group.

The company, which has already received about €19bn in German government support, said on Wednesday that talks with its major shareholder, Finnish utility Fortum, and the German government were continuing over a “long-term solution”.

Uniper’s shares were down about 15 per cent at €4.14 at lunchtime on Wednesday.

The company has been driven to the brink of insolvency by Russia’s decision to choke off gas to Germany, which has forced it to buy more expensive gas on the spot market in order to meet its supply contracts.

In July the government agreed on a €15bn rescue package and took a 30 per cent stake in the company. But Uniper requested more financial help in August, raising the bill for its bailout to €19bn.

Officials in Berlin have been desperate to prevent a collapse, fearing it might trigger a Lehman Brothers-style meltdown of the whole German energy sector.

Uniper said on Wednesday that since the July deal was signed, Europe’s energy crisis had “escalated further” thanks to Russia’s move on September 3 to suspend indefinitely all gas shipments through the Nord Stream 1 pipeline that connects Russia to Germany.

Uniper said gas and power prices had been “extremely high and volatile” and that consequently, its “financial losses due to the higher gas procurement cost have significantly increased”.

“The deteriorating operating environment and Uniper’s financial situation have to be taken into account while Fortum, the German government and Uniper continue their discussions on a long-term solution for Uniper,” the company said.

Since the start of the year European gas prices have tripled from already elevated levels to trade at €211 a megawatt hour. The rally has accelerated since gas supplies through Nord Stream 1 were first reduced in June, more than doubling as traders were forced to scramble to find alternative supplies. Electricity prices have also risen sharply, tracking the rise in gas owing to its use in power generation.

The statement said the parties involved in the talks on Uniper’s future were checking “alternative solutions, including a direct equity increase”, which would lead to the government owning a significant majority stake in Uniper.

It said Uniper’s financial losses owing to higher gas procurement costs had significantly increased. But it said no decisions beyond what was agreed in the stabilisation package in July had been made so far.

The news that the German government may increase its stake in Uniper to more than 50 per cent was first reported by Bloomberg, which said Berlin was open to fully nationalising the company. The government declined to comment on the report, saying only that talks were ongoing.

Uniper’s chief executive Klaus-Dieter Maubach warned last week that losses suffered in replacing missing Russian gas supplies might reach a €7bn limit this month, which would oblige the government to step in again.

Under the bailout agreed in July, the company was given access to as much as €7.7bn in government support, as required, while a credit line from German state-owned development bank KfW was increased from €2bn to €9bn.

In late August Uniper announced it had utilised the €9bn KfW credit facility in full.