Germany: Uniper gas company says it is in ‘final talks’ about possible takeover by the government | TNZT | 20.09.2022

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Germany is nearing a preliminary agreement to nationalize energy company Uniper amid the ongoing fallout from Russia’s invasion of Ukraine, according to reports released by Bloomberg and later by other German media outlets.

A company spokesman said on Tuesday that parties involved in the talks are looking at a possible capital injection that would mean the German government would take a significant majority stake in the ailing gas importer.

“As a result, it is envisaged that the federal German government will take a significant majority stake in Uniper,” the company said in a later statement, which it was required to provide for the information of shareholders. “The final agreement has not yet been finalized.”

Finnish Fortum seems to give up majority stake

Uniper’s largest shareholder is currently the Finnish state energy company Fortum. Reuters news agency quoted unnamed sources familiar with the negotiations and said Fortum’s exit from Uniper’s ownership structure would be part of the bailout package.

According to Uniper, the government bailout would take the form of a capital investment, its second this year, worth around €8 billion, and the German government would acquire Fortum’s stake in the company.

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Fortum also issued a statement to investors on Tuesday, saying that part of the rescue would mean getting the Finnish company back the capital it had recently plowed into Uniper to keep it afloat. The company said trading in its shares had been suspended pending the conclusion of the talks, and would issue a new statement upon completion.

Uniper had already said last week that “talks are underway” about a second capital injection that would result in a “significant majority” for the German government. At the time, however, the company’s spokesperson declined to comment on reports of a possible full-scale takeover by the government.

A spokeswoman for the German Ministry of Economy also said talks were ongoing and “concentrated”, but declined to discuss details, saying “when they [the talks] are complete, we will provide information about it.”

Reuters reported that a final deal was likely to be announced as soon as Wednesday.

Consequences of the Russian invasion of Ukraine

Uniper’s situation has become increasingly fragile since the Russian invasion of Ukraine; the German government effectively bought a 30% stake in the company in July in exchange for a capital injection.

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At the time, German Chancellor Olaf Scholz said Uniper was in “big trouble” as a result of the worsening energy crisis.

The company was among those involved in the construction of the Nord Stream 2 pipeline, which was not activated after construction and has been frozen indefinitely as part of the package of sanctions imposed in response to the invasion.

But earlier this month, the situation for Uniper became even more difficult. Russian energy giant Gazprom said gas supplies to Western Europe via the Nord Stream 1 pipeline had been completely halted due to equipment problems, leaving no timeline for resuming operations.

The ailing energy importer has used up its cash reserves to buy gas on the expensive spot market after Moscow cut power to Germany, as well as trying to fill storage facilities in anticipation of winter shortages.

Last month, Uniper said high energy prices and a threat from Russia to cut gas supplies had hit the Düsseldorf-based company hard. It also warned that a severe winter was ahead.

Controversial gas tax questioned?

A nationalization of Uniper could call into question another recent government policy designed to deal with high gas prices. Berlin announced plans last month for a gas surcharge for consumers of 2.4 euro cents per kilowatt hour of electricity from October. This was to help importers such as Uniper deal with rising market prices.

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Germany’s dpa news agency and other media reported on Tuesday that Economics Minister Robert Habeck, who had already criticized the proposal, had “financial doubts” about the levy’s constitutionality, and whether Uniper’s potential nationalization would affect it. could be.

However, the decision on whether the levy would be legal would ultimately rest with the Ministry of Finance or possibly German courts.

The opposition Christian Democrats had already called for the tax to be scrapped.

In the meantime, the government had already said it was working on adjustments and improvements to the proposal.

msh, jsi/jcg (dpa, Reuters)

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