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July 25, 2022

Germany to rescue gas importer Uniper with $15.3bn bailout

As part of the bailout deal, the federal government will purchase a 30% interest in Uniper.

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Germany has agreed to offer a €15bn rescue package ($15.3bn) to save the energy company Uniper from bankruptcy as Russia continues to cut gas supplies.

It forms part of a package of measures agreed between Germany, Uniper, and its Finnish parent Fortum to help stabilise the financial position of the gas utility firm.

The package will see the German Government acquiring a 30% staje in Uniper from Fortum by subscribing to approximately 157 million new ordinary registered shares, each valued at €1.70 per share.

This will reduce Fortum’s stake in Uniper from nearly 80% to 56%.

The government will also issue up to €7.7bn in further capital against the issuance of mandatory convertible instruments to address potential losses.

Uniper will also receive an additional €7bn in liquidity support from German state-owned bank KfW, through an increase of its existing credit facility.

In a press statement, Uniper said: “The package of measures secures Uniper and provides a solution to the losses incurred by Uniper due to the prevailing gas supply shortage. The measures agreed are also intended to ensure that Uniper’s credit rating remains investment-grade.”

The German Government is also planning to introduce a cost absorption mechanism whereby Uniper can transfer additional costs of up to 90% for replacing missing gas supplies from Russia’s Gazprom, effective from 1 October 2022.

The government would cover the losses on gas sold in the country.

Uniper will also work with Fortum and the German Government on a long-term solution to restructure the wholesale gas contract architecture.

Fortum president and CEO Markus Rauramo said: “New geopolitical realities have shaken the European energy system to the core, and this determines a new framework for European energy companies.”

“Whilst we have now achieved immediate stabilisation of Uniper, further efforts will be required to create a long-term sustainable basis for the gas business. The agreed solution is a major step in ensuring that Uniper, and consequently also the Fortum Group, return to a stable footing.”

Bloomberg News recently reported that Germany was in talks with energy giant Shell, as well as other undisclosed liquefied natural gas (LNG) suppliers, for long-term supply contracts.

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