Frankfurt According to financial circles, the federal government is also playing through a participation of well over 30 percent in the discussions about a possible rescue operation for the ailing gas trader Uniper. The background is the importance of the investment grade credit rating for the energy company’s business, said several people familiar with the matter on Thursday.
The federal government is currently preparing an amendment to the law to save energy companies, which is to be passed in parliament on Friday. It will also deal with the question of the extent to which energy traders such as Uniper will be allowed to pass on the higher purchase prices for gas to consumers in the future, regardless of existing contracts. Uniper’s concrete need for help also depends on this.
The company itself, its majority owner Fortum and the federal government declined to comment on the details of the talks.
Uniper got into financial difficulties as a result of the Ukraine war and asked for state aid. The company currently receives hardly any Russian gas and at the same time has to meet delivery obligations to public utilities, for example. Uniper therefore has to buy gas on the market – at significantly higher prices than it gets from its customers.
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In addition to the high purchase prices for natural gas, Uniper also has to deposit high security deposits for the sale, so-called margining payments. The company pays a kind of deposit before the agreed delivery date to ensure that Uniper delivers. The payment corresponds to the difference between the contracted price and the current spot market prices.
If the spot market prices are very high, as is currently the case, the security payments also increase. Uniper gets these back after a while. But in order to keep them, the group needs a lot of liquidity. And in order to get these from banks, Uniper needs a good credit rating. In the event of a worse rating, the necessary security deposits also increase.
In the case of silent participation, up to five billion euros could flow
In order to be rated well by the agencies, companies need strong equity positions on the balance sheet. Uniper is therefore of little help with additional government credit lines. Support for the group through a capital increase of new shares of up to 25 percent of the shares subscribed by the federal government is under discussion, as well as a silent participation by the federal government. This is an equity instrument without voting rights – according to financial circles, three to five billion euros could flow.
However, it is unclear whether this will be enough for Uniper to maintain its investment grade rating. The entry of the federal government with well over 30 percent of the shares is therefore also an option, explained several people familiar with the matter.
If companies are state-owned to a higher degree, they benefit from the implicit state guarantee. So rating agencies rely on the government to support the company in an emergency and lenders to get their money. For example, no equity injections are planned for the gas company VNG, which is largely publicly owned.
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Since this is a state bailout, the federal government could be released from the obligation to make a takeover bid to all shareholders. Normally, this step is due as soon as an owner acquires more than 30 percent of a publicly traded company. A nationalization of Uniper – also through a large capital increase that dilutes the shares of the remaining shareholders down to residual positions – would be theoretically possible.
Selling peripheral areas is another option
However, that would amount to a de facto expropriation of majority owner Fortum, which holds 78 percent of the company. The utility is majority-owned by the Finnish state, so such a move would entail political complications. “Finland is a friendly country, so Germany will probably not do anything unfriendly,” said an insider. Another option for stabilizing Uniper is the sale of peripheral areas of the utility, it said.
The Uniper rescue package should be negotiated in detail as soon as the new version of the Energy Security Act (EnSiG) is in place. Even if this creates an opportunity to pass on increased gas purchase costs, there will always be a deductible for energy companies, a person familiar with the matter had said. “These will be substantial amounts. This will lead to bleeding if the companies are not stabilized at the same time.”
The rating agencies usually give companies a warning shot three months before a downgrade. Standard & Poor’s submitted this on Tuesday and put Uniper on “Credit Watch Negative”. So there would still be some time. “It’s not like we need to have a fix in a matter of days,” said an insider.
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