RWE may have to adjust asset sale goals: CEO

Thu Oct 25, 2012 8:36am EDT

CEO of RWE Peter Terium speaks during an interview with Reuters in Frankfurt October 24, 2012. REUTERS/Lisi Niesner

CEO of RWE Peter Terium speaks during an interview with Reuters in Frankfurt October 24, 2012.

Credit: Reuters/Lisi Niesner

Related Topics

FRANKFURT (Reuters) - The chief executive of Germany's second-biggest utility RWE (RWEG.DE) signaled on Wednesday that it may take longer to sell up to 7 billion euros ($9.08 billion) in assets which it currently plans to dispose of by the end of next year.

In an interview with Reuters, Peter Terium said there were more sellers than buyers in the market for utility assets and that this was depressing prices.

"The targets stand and are important but the situation is changing. One has to be able to adjust one's plans to reality," Terium said.

"We have always said we will push aggressively on our asset sale program but also that we would walk away from a deal if the price is not right."

RWE is under intense pressure from rating agencies to accelerate its asset sales program, but shareholders have said the group should take its time rather than risk dumping assets.

So far, the group only managed to sell about 1 billion euros of the total 7 billion target volume.

One of the assets on the block is the group's Czech gas transmission unit Net4Gas, which could fetch 1.4-2 billion euros, and Terium said the company aimed at completing the sale in 2013 at the earliest.

Terium, a 49-year old Dutchman, has been tasked with repositioning RWE -- a company that was defined for years by its outgoing chief and his "nuclear Rambo" approach -- after it was hit by Germany's decision to abandon nuclear power by 2022.

The company has already announced 10,400 job cuts, and Terium -- who took the top job on July 1 -- said more cuts were to come.

"Job cuts will exceed the current figure. It's the dimension that is not yet clear," he said, adding that investments would fall in 2013 and beyond and that further cost cuts planned after 2014 would affect "all areas" of RWE.

Trained as an accountant and tax auditor, Terium has a more pragmatic approach to the nuclear debate than its predecessor Juergen Grossmann, acknowledging Germany's plan to exit nuclear power by 2022 is final and declaring RWE wants to be part of the solution.

GAS CONTRACTS

Terium -- a vegetarian who drives a hybrid car and enjoys jogging and yoga -- also said RWE was on track to resolving its remaining two gas disputes over long-term contracts in 2013 by the latest.

Earlier on Wednesday, Czech unit RWE Transgas said it has won one of the outstanding disputes between RWE and Russia's Gazprom (GAZP.MM) in a Vienna court.

In August, RWE said it was still in talks with Gazprom and another supplier, Dutch GasTerra (XOM.N) (RDSa.L), having negotiated better prices for over half of its total procurement volume with Norway's Statoil (STL.OL) in the first half of 2012.

The volume covered by the still outstanding re-negotiations at the time was put at 11 billion cubic meters of annual procurements.

Gas contracts have been a major problem for European utilities which are being squeezed as they buy gas under long-term deals concluded with origin suppliers, linked to expensive oil, while having to sell to their customers at lower local prices.

The remaining issues yet to be settled with Gazprom outside the Czech solution represent another important part of RWE's procurement volume.

A possible solution with Gazprom on those would be likely to be modeled on a similar case between Italy's Edison, owned by EDF (EDF.PA), and Qatar's Ragas over liquefied natural gas (LNG) prices, Terium said.

The Paris-based Court of Arbitration of the International Chamber of Commerce last month decided that case in favor of the importer, Edison.

"The market dynamism, on which that decision was based, is not dissimilar to the one we have assumed for our case," Terium said.

($1 = 0.7711 euros)

(Reporting by Christoph Steitz, Tom Kaeckenhoff, Vera Eckert, Alexander Ratz, Noah Barkin and Maria Sheahan; Editing by Noah Barkin and Marguerita Choy)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.