Berlin, Dusseldorf, Frankfurt For weeks, the federal government has been fighting for a rescue package for Germany’s largest gas trader Uniper. The solution is now in place: the state is taking a 30 percent stake in the energy supplier and is making 7.7 billion euros available, which should have a similar effect to equity.
At the same time, the state-owned KfW bank is to increase the credit lines for the group from the previous two billion euros to nine billion euros.
In addition, the federal government is enabling gas traders such as Uniper to pass on the sharply increased prices. Up to 90 percent of the additional costs are to be distributed among all consumers via an apportionment procedure. The pay-as-you-go solution is to apply from October 1st. According to Chancellor Olaf Scholz (SPD), this levy costs a family of four around 200 to 300 euros per year.
Olaf Scholz: Federal government allows Uniper to pass on gas prices
At noon, Scholz informed in Berlin about the details of the rescue – and also planned relief that the traffic light coalition is planning for the citizens. “We will do what is necessary and for as long as it is necessary,” said the Chancellor. He announced a housing benefit reform, which should also include a flat-rate heating cost allowance. The government is also examining how to protect tenants from payment defaults in the event of particularly high energy costs.
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The Handelsblatt had already reported on the plans to rescue Uniper. It is surprising that the federal government linked the aid to Uniper withdrawing an ongoing lawsuit against the Netherlands. Uniper went to court because the Netherlands passed a coal phase-out plan – without compensation for the coal companies.
In addition, dividend payments will be suspended as long as the stabilization measures are in place. The remuneration of the Management Board is also limited. The federal government gets seats on the supervisory board. However, the stabilization package must be approved by the European Commission and Uniper’s shareholders. To this end, the company intends to convene an extraordinary general meeting shortly.
After the plans were presented, Uniper shares fell by up to 19.5 percent to a record low of EUR 8.46 after initially gaining more than eleven percent. The papers of the Uniper mother Fortum also turned negative in Helsinki and lost 2.5 percent.
Olaf Scholz: “Will join Uniper with 30 percent”
Germany’s largest gas trader is struggling with the aftermath of the Ukraine war. The throttling of Russian gas deliveries has brought the Düsseldorf group into massive difficulties.
For weeks now, Russia has been sending only 40 percent of the possible delivery volumes via the Nord Stream 1 Baltic Sea pipeline to Germany and Europe. For Uniper, as one of Gazprom’s largest customers, the situation is getting worse every day. The company has to buy the missing quantities of cheap gas from Russia on the market at high cost in order to be able to supply its customers.
The company has not yet been able to pass on the prices due to existing contracts. That’s why it’s been paying more for weeks – up to a billion euros a month. This should now change in perspective with the pay-as-you-go system as part of the rescue package.
The federal government is planning to get involved with Uniper
The federal government wants to pay 1.70 per share for its shares. With a stake of 30 percent, only just under 267 million euros would come together. Since that is far from enough, the majority of the aid should flow into hybrid capital, i.e. not as direct equity. This is intended to protect Uniper’s majority owner Fortum from de facto expropriation. If all of the federal aid were to come in the form of new shares, Fortum’s stake would be severely diluted, and the Finnish group would only hold a few percent.
The equity-like funds (hybrid capital) that the federal government is now providing for Uniper is a so-called mandatory conversion instrument. These are fixed-income securities that automatically convert into shares at the end of the term. If the federal government converts the bonds into shares, the state gets the paper 25 to 50 percent cheaper. For rating agencies, they count in a similar way to equity – and help to achieve correspondingly better ratings. The issue will be in tranches as required by Uniper’s needs. Until the required money has been raised, parts of the KfW loans should quickly bridge financial gaps.
According to the solution that has now been found, however, majority owner Fortum can buy back part of the paper from the state at any time.
Habeck wants to prevent the domino effect of the Uniper case
Economics Minister Robert Habeck (Greens) made it clear weeks ago that the group must and will be supported by the state. A Lehman situation in the energy industry must be prevented at all costs, said the politician. The bankruptcy of the US bank Lehman Brothers had a domino effect in 2008 and triggered the global financial crisis. As one of the largest European gas suppliers, Uniper is considered systemically important. His customers include hundreds of companies and municipal utilities.
Chancellor Scholz emphasized on Friday that the federal government is only concerned with stabilizing the German energy system. “As a state, we don’t want to become entrepreneurs,” said Scholz, referring above all to the example of Lufthansa. Here, too, one did not intervene in the ongoing business.
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