Uniper’s new bailout mixes scars and consolations

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Uniper logo is seen in this illustration taken, May 1, 2022. REUTERS/Dado Ruvic/Illustration

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LONDON, Sept 21 (Reuters Breakingviews) - Germany and Finland’s cross-border wrangling over Uniper (UN01.DE) is nearing its end. Berlin on Wednesday effectively nationalised the stricken energy company by injecting 8 billion euros in fresh equity, and paying 78% Finnish state-held shareholder Fortum (FORTUM.HE) token compensation in return. The initial impression that Germany has the best of it depends on what happens next.

Fortum boss Markus Rauramo has good cause to concede that his company should feel “humble” about the current deal. In recent years Fortum had fought tooth and nail to build up its stake in Uniper, a jumble of Swedish low-carbon and German gas supply assets, and spent 7 billion euros doing so. At the lowly 1.70-euro-a-share price at which Berlin is injecting equity and buying out the Finnish group, Rauramo will only get 500 million euros for his stake. Even with 900 million euros of cumulative dividends, he faces a big write-down.

That said, Fortum also gains from extricating itself from the Uniper mess. The German company last month recorded a 12 billion euro half-year net loss from soaring collateral demands on loss-making derivative trades, and the need to pay exorbitant prices for gas that it no longer gets from Russia but still needs to supply to customers. Deconsolidating Uniper’s losses from its accounts means Fortum’s balance sheet equity will therefore be 5 billion euros higher than it would have been. And Germany’s rescue will also enable Uniper to repay a 4 billion euro support loan advanced by the Finns.

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German Economy Minister Robert Habeck’s outlay may prove wise. The acquisition of Fortum’s shares and dilution of Uniper’s minorities from the capital injection leave Berlin with a 98.5% stake in a critical piece of energy infrastructure. That’s appropriate given the current crisis and the country’s fiscal strength. And Germany can keep any upside if Uniper recovers. With Berlin controlling how much the group can pass on its swollen costs to domestic energy consumers, that could be tangible.

Even so, Germany is now squarely on the hook for future Uniper hits. If wholesale gas prices stay sky-high and angry German consumers make it hard for the government to pass on high gas import prices, Habeck could always lumber Uniper with more losses. While the distribution of pain is now more rational, it’s not yet clear whether officials in Berlin or Helsinki will ultimately wind up more glum.

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

CONTEXT NEWS

Germany confirmed the nationalisation of struggling gas importer Uniper at a cost of 8 billion euros ($7.9 billion) on Sept. 21.

Uniper, whose shares were 20% lower at 3.34 euros at 0900 GMT, will see Germany inject another 8 billion euros, partly by buying out Finnish utility Fortum’s holding for 1.70 euros per share.

Shares in Fortum were up around 13.5% at 13.60 euros as of 0900 GMT.

After completing a capital increase and the Fortum share acquisition, which excludes the Finnish firm’s subscription rights, Germany will hold 99% of Uniper, the economy ministry said.

“The state will – that’s what we’re showing now – do everything possible to always keep the companies stable on the market,” German Economy Minister Robert Habeck told reporters.

In the second quarter alone, Fortum made a loss of 9.1 billion euros due to Uniper’s losses in gas trading.

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Editing by Neil Unmack and Oliver Taslic

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