Germany hands €15bn to Uniper in bailout deal
The German government has stepped in to rescue troubled utility giant Uniper with a whopping €15bn bailout, after the gas importer suffered sharp losses amid the West’s standoff with Russia over energy supplies.
In one of the biggest bailouts in German history, the country’s government will take a 30 per cent stake in Uniper, reducing the ownership of its Finnish parent Fortum to 56 per cent from nearly 80 per cent.
It will also allow Uniper to start passing on some of the costs of soaring gas prices to consumers in the coming months, which German Chancellor Olaf Scholz revealed would be offset by more welfare support to shield poorer households.
This follows weeks of tough negotiations following severe reductions in Russian gas flows into Europe, creating shortages for energy consumers while also driving up the spot price of gas to near record highs.
Under the agreement, Germany will buy 157m new ordinary Uniper shares for €267m, and will make €7.7bn of capital avaiable.
In addition, state-lender KfW will raise an existing credit line by €7bn, to €9bn in total.
The Chancellor, Olaf Scholz, confirmed the government would eventually relinquish its stake.
He compared the bailout to former European Central Bank (ECB) chief Mario Draghi’s promise to do “whatever it takes” to save the euro.
Scholz said: “We will do everything necessary that we can together as a country, as companies, as citizens, to get through this situation so that nobody is put in an impossible situation.”
Germany has accused Russia of deliberately strangling gas flows to Europe in retaliation to Western sanctions after the country’s invasion of Ukraine.
This has been denied by the Kremlin, which has said Gazprom remains ready to fulfil all of its commercial obligations.
The package needs approval from both Uniper’s shareholders and the European Commission.
It also carries certain conditions, including that Uniper withdraws a lawsuit against Netherlands over its coal phase-out alongside a commitment by the Duesseldorf-based group to suspend dividend payments for the duration of its bailout period.
Following the rescue, Uniper, Fortum and the German government will work together on a long-term solution to reform the company’s wholesale gas contract architecture, which has exposed the group to billions in losses.
The parties intend to agree on the longer-term solution by the end of next year.