Lines are now running hot on the axis Berlin-Espoo-Düsseldorf-Helsinki, but the negotiators are not saying a word about the progress of the rescue package of the crisis company Uniper.
The representatives of Fortum, Uniper, Germany and Finland say only that the negotiations are at their hottest. Discussions are held “day and night”, but even that is not told where the negotiations are taking place.
– If we were to tell about every step, it could hinder the success of the negotiations, the spokesperson of the German Ministry of Economy reasoned in Berlin.
It is clear that Uniper needs more support. The gas giant’s losses will already exceed seven billion euros by the end of this month, says Uniper’s CEO Klaus-Dieter Maubach review last week.
Now, according to media reports, Germany is planning to take the majority share of Uniper for itself. Fortum hardly has the ability or desire to pay Uniper even a cent more in support.
At the beginning of the year, Fortum already granted its subsidiary a group subsidy of eight billion euros.
It would be good for Fortum to become independent
After the Finnish government, Fortum’s second largest owner is the pension company Varma with a 1.26 percent share. CEO of Varma Risto Murron according to Fortum now has to completely renew its strategy.
– The exceptional situation is indicated by the fact that, due to the liquidity situation, it has been necessary to obtain a loan from the state with very strict conditions, says Murto.
Read more here: The state prepared a crisis loan of more than 2 billion for Fortum through Solidium – this is how CEO Rauramo commented on the loan
According to Murro, Fortum should reach a situation as soon as possible “where it can decide on its own future”.
– Now it’s not there, but works in a situation where, in terms of business operations in Russia and Central Europe, states are also a significant negotiating party, he says.
In Murro’s opinion, the positive thing about the situation is that Fortum’s Nordic business is healthy. So Fortum can have a good future, which is why it is not a “full crisis company”.
So would it be in Fortum’s interest if Germany nationalized Uniper – then Fortum would have a hope of getting even the eight billion euros used to finance it back from Uniper?
– Uniper’s future is so uncertain and the state’s role so significant that, depending on the conditions, nationalization can be an attractive option from an investor’s point of view, Murto formulates.
Pension company Ilmarinen’s investment and vice president Mikko Mursula in my opinion, the most important thing is to secure Fortum’s eight billion receivables from Germany. Otherwise, the Finns may have to capitalize Fortum even more.
– If the eight billion remains there for you to know and Fortum has to make more write-downs, then we are talking about such amounts of euros that Fortum may need more capitalization, says Mursula.
He also doesn’t think it makes sense that Fortum would be left hanging on the German gas market as a minority shareholder of Uniper.
– It would be positive if it could get rid of it [Saksan] from Uniper, but could keep, for example, the power plants in Sweden in exchange for the funding they gave to Uniper. I don’t think it’s likely, but it would be the best outcome, says Mursula.
Pension company Elo is Fortum’s third largest owner. Elo’s director responsible for equity investments Niko Syrjæsen according to Fortum, the biggest risks, i.e. the energy policy of Russia and Germany, have already materialized.
– Diluting the ownership stake in Uniper would shift Fortum’s focus to Nordic clean electricity production, which would be a positive thing from the shareholder’s point of view, Syrjänen replies to by email.
According to him, the worst thing would be if Fortum had to recapitalize Uniper and lose the entire grant it gave to Uniper at the beginning of the year.
Economist: “Fortum has little to negotiate”
Economist Roger Wessman considers the nationalization of Uniper a likely option. Fortum doesn’t even have anything to negotiate in the situation, he says.
Fortum’s interests in Uniper are an ownership stake, a loan of four billion euros granted at the beginning of the year, and guarantees of four billion euros.
If Germany capitalizes Uniper, it will secure those eight billion at the same time, Wessman believes. Therefore, nationalization is also in the interests of Finland and Fortum.
However, Fortum would have to wait for its billions, because the loans Uniper received from Germany are privileged: the company must pay them off first.
– Fortum’s ownership will practically drop to zero, but the loan and guarantees granted by Fortum to Uniper are secured. From Fortum’s point of view, it is the best and also the most likely outcome, Wessman estimates.
If, in return for the German state coup, Fortum demands its money immediately, the picture becomes more complicated. This is probably one of the reasons why the negotiations are now dragging on.
Chancellor of Germany By Olaf Scholz it’s hard to go public and say that Uniper will get another billion-dollar subsidy, which will immediately pay debts to Finns.
– Another thing is to take care of the guarantee and make an agreement where Fortum’s loan does not completely lose its value, but at least it is not paid off immediately, Varman Murto says.
Fortum paid a total of more than seven billion euros for 78 percent of its ownership in Uniper. At the moment, the company’s value is just over one and a half billion euros. With the July agreement, Fortum’s ownership was reduced to 56 percent.
In a possible nationalization, Fortum’s ownership in Uniper would evaporate completely, and Fortum would lose the opportunity to get anything back from its Uniper investments.
However, according to Wessman, this will not ruin Fortum’s finances. The money invested in Uniper’s shares are already costs sunk into Fortum’s balance sheet.
– Already in July, it seemed clear that most of this money had been lost. Now it can be discussed whether the Uniper deal made sense at all. In retrospect, no.
The worst happened in the gas market
In the July rescue package, the German state committed to take responsibility for Uniper’s losses when they exceed seven billion euros.
When that limit is now being crossed, talk has started in Germany about the nationalization of Uniper. Probably one of the German negotiators leaked the nationalization plans on Wednesday news site for Bloomberg (you are moving to another service).
Did Germany slip out of the agreement?
– In July, it was assured that the German state would recapitalize Uniper so that Fortum’s shareholding would not weaken. In that respect, the nationalization speech seems to contradict what was agreed in July, says Wessman.
However, according to him, the July agreement was not pointless for Fortum. If the price of natural gas had not gone up sharply after the contract was signed in August, Uniper would not necessarily have needed more help.
– If the development had been different, based on the July agreement, Fortum would have been able to get some money back from its Uniper ownership. But the development was not different.
You can discuss the topic on 16.9. until 11 p.m.
Read also:
Analysis: Fortum’s dream of taking over Europe will evaporate if Uniper is nationalized – at the same time the fear of Finns losing billions would come true
Fortum’s situation looks dire, but the company still has a trump card in its hand – experts dismiss talk of bankruptcy