(Bloomberg) — The German government may increase its stake in Uniper SE above 50% and is open to taking the historic step of fully nationalizing the country’s biggest gas importer to prevent a collapse of the energy system.
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Dusseldorf-based Uniper needs more help from the state after already tapping into a support package that could be worth as much as 20 billion euros ($20 billion), according to people familiar with the matter. A surge in natural-gas prices and Russian supply cuts have triggered millions in daily losses, prompting the government to step in with a rescue package in July which included a 30% stake.
Chancellor Olaf Scholz’s administration is ready to inject more capital and increase its stake above the 50% threshold, said one of the people, who asked not to be identified because the information is confidential.
A full nationalization is also under discussion, and Uniper’s Finnish parent company Fortum Oyj would have a say in that decision, the person said. Talks with the Finnish government — Fortum’s majority owner — are ongoing, and Germany has previously said it isn’t willing to buy out the Finnish stake.
Uniper confirmed on Wednesday that one of the options being discussed is the German government taking a “significant majority” stake. Beate Baron, a spokeswoman for Germany’s economy ministry, declined to comment.
Uniper shares were down 9.6% as of 12:19 p.m. in Frankfurt after earlier surging as much as 10.6%, while Fortum shares were down 0.9% after rising as much as 7.1%.
Fortum said in a statement Wednesday that no decisions have been made “beyond what was agreed in the stabilization package in July” but added that “alternative solutions” are being considered.
“The deteriorating operating environment and Uniper’s financial situation have to be taken into account while Fortum, the German government and Uniper continue their discussions on a long-term solution,” Fortum said, adding that it would “update the market as and if necessary.”
What Bloomberg Intelligence Says…
“Uniper’s potential nationalization by Germany could give minority investors a way out ahead of an uncertain recovery, with losses from having to replace the halted Russian gas supply at current prices likely to surpass 18 billion euros this year, our analysis shows.”
–Patricio Alvarez and Joao Martins. Read more here.
Germany is determined to ensure Uniper’s survival in coming months, when the energy crunch could worsen as temperatures fall heading into winter. Russian supply curtailments have forced the company to buy gas in the expensive spot market to fulfill contracts, pushing it to the edge of insolvency.
Gas futures are about three times higher than a year ago as Russia retaliates for sanctions over its war in Ukraine. Rising energy prices have rocked energy companies, with margin calls — the collateral required to back trades — surging to unsustainable levels.
VNG AG, a subsidiary of German utility EnBW AG and another major gas importer, submitted an application for government aid last week.
Uniper Chief Executive Officer Klaus-Dieter Maubach warned last week in an interview with Bloomberg that losses to replace missing Russian gas flows might reach a 7 billion-euro ($7 billion) limit this month, which would force the government to step in again.
The stabilization package with the government includes a 7 billion-euro backstop to secure the company until the fourth quarter, but hitting that limit “will definitely be earlier,” Maubach said on the sidelines of a conference in Milan.
The aid package offered by the government in July still needs to be signed and then approved by the European Union. The agreement included mandatory convertible securities of 7.7 billion euros as well as a 9 billion-euro credit line from state development bank KfW, which Uniper is seeking to increase to 13 billion euros.
(Updates with Uniper comments from fifth paragraph)
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