Finnish state energy company Fortum confirmed on Friday that it has agreed in principle to a deal in which Germany will bail out its subsidiary Uniper, Germany’s largest natural gas producer.
Uniper has been struggling for months due to sanctions imposed on Russia and price increases for gas from other sources.
To keep the company afloat and ensure gas supply, Germany agreed to take a 30 percent stake in Uniper, offering the company up to 7.7 billion euros in financing.
Fortum added in its statement that the German state-owned bank KfW will also give Uniper an additional seven billion euros. "liquidity support by increasing the current credit limit from the current two billion to nine billion."
After the deal is completed, Fortum’s ownership in Uniper will decrease to 56 percent. Fortum currently owns 78 percent of the company.
Fortum, of which the Finnish state owns 51 percent, confirmed the agreement on Friday.
CEO of Fortum, Markus Rauramosaid the deal was the best option for all parties.
"We were driven by urgency and the need to protect Europe’s security of supply during the war. In addition to the German government and our Uniper colleagues, I would also like to thank the Finnish government for their support in recent weeks." Rauramo said in the company’s press release.
Due to the lack of gas supplies from Russia, Uniper has had to buy fuel from other sources at a significantly higher price in order to meet the guaranteed customer supplies.
The company’s losses are tens of millions of euros per day, which is why the search for a solution to the problem has been so intense in the last couple of weeks.
As Germany’s largest natural gas transmission company, the country practically could not allow it to go bankrupt due to the vital nature of the fuel for heating and industrial use.
At the same time, the Finnish government wanted to ensure that the company’s rescue package was not financed by taxpayers.
Source: The Nordic Page