E.ON to exit Finland, sell stake in Fennovoima

HELSINKI Wed Oct 24, 2012 8:40am EDT

Flags of E.ON Ruhrgas, the gas sector of German utility giant E.ON flutter in front of the E.ON Ruhrgas headquarters in Essen August 8, 2011. REUTERS/Wolfgang Rattay

Flags of E.ON Ruhrgas, the gas sector of German utility giant E.ON flutter in front of the E.ON Ruhrgas headquarters in Essen August 8, 2011.

Credit: Reuters/Wolfgang Rattay

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HELSINKI (Reuters) - German utility E.ON (EONGn.DE) is selling all its operations in Finland, including a stake in an unbuilt nuclear project, as it tries to raise funds and reduce its debt.

The move raises questions over the future of the Fennovoima reactor which is aimed at providing cheap energy to shareholders such as stainless steel maker Outokumpu (OUT1V.HE), retailer Kesko (KESBV.HE) and subsidiaries of Swedish metals firm Boliden (BOL.ST).

E.ON, whose debt stood at 41.1 billion euros at the end of June, needs cash for its expansion in growth markets such as Turkey and Brazil amid stagnant growth in debt-burdened Europe.

Like its peers RWE (RWEG.DE) and EnBW (EBKG.DE), it was dealt a massive blow when Germany decided last year to phase out nuclear power following Japan's Fukushima disaster.

"Our refocus will allow us to invest our resources and direct our capabilities towards strengthening our other assets in the Nordic region," Jonas Abrahamsson, managing director of Nordic unit E.ON Sverige, said in a statement.

Earlier this year, E.ON announced plans to buy a 10 percent stake in Brazil's MPX Energia MPXE3.SA for $471 million.

E.ON's 34 percent makes it the biggest single shareholder in the Fennovoima project, which is set to choose a supplier for a planned reactor in Pyhajoki, northern Finland, next year.

The other investors hold stakes through an entity called Voimaosakeyhtio SF.

"I realize the special importance of the Fennovoima project to Finland, and we will support the other shareholder, Voimaosakeyhtio SF, in finding a way forward for the project," Abrahamsson said.

Fennovoima chairman Pekka Ottavainen told Reuters he was confident about the project's future and said E.ON would help it find a new investor.

The project, originally estimated to cost 4-6 billion euros, required a new tranche of financing from owners by the summer of 2013, he said.

"The project goes forward according to previous plans," he said. "We continue to believe that this plant will be built despite this major change."

Outokumpu's Chief Executive Mika Seitovirta said the company was still committed to the project. Shares in the company fell 3.5 percent at 1118 GMT, partly due to weak third-quarter results.

Fennovoima dismissed its chief executive earlier this month, giving little explanation other than that the Pyhajoki project needed a different leader.

Fennovoima plans to choose next year either Areva (AREVA.PA) and Toshiba (6502.T) as the supplier to the Pyhajoki reactor.

E.ON, which also has a 20 percent stake in gas supplier Gasum, had Finnish revenues of around 155 million in 2011.

(Reporting By Jussi Rosendahl, Terhi Kinnunen and Maria Sheahan)

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