Olaf Scholz insisted on announcing the news personally, even if he had to interrupt his vacation in the Allgäu to do so. The Federal Chancellor would comment on “current energy policy issues,” it had said in advance. But of course it was mainly about the billion-euro rescue of the badly hit energy company Uniper.
What Scholz then announced on Friday afternoon had it all: The federal government is supporting Uniper with a total of up to 15 billion euros, will hold a 30 percent stake in Uniper and at the same time help to finance the Düsseldorf company. Among other things, the credit line of the state development bank KfW is to be increased to around nine billion euros. It is likely to be one of the largest rescue operations by a German company. At the beginning Scholz said: “You’ll never walk alone. Not an individual citizen, not even the individual companies in this country.”
Scholz also announces a surcharge for gas customers. Uniper can demand higher prices from customers – municipal utilities and industrial companies – by October at the latest. It is “important that Uniper can also pass on its increased prices,” said the Chancellor. However, this will “become noticeable” for the individual households, Scholz speaks of additional burdens per year of 200 to 300 euros for families and at the same time brought further relief for citizens into play.
The rescue was preceded by tough negotiations, especially with the majority shareholder Fortum. The Finnish group holds almost 80 percent of Uniper’s shares and refused to participate in the rescue until the very end. Now he is going along with it and will remain the majority shareholder for the time being. The Finns originally wanted the gas business to be split off and Germany to take over only this problematic part. But that split is now off the table.
Uniper had already applied for state aid two weeks ago
Two weeks ago, Uniper officially applied for state aid from the federal government. The company is under enormous pressure from the reduced gas supplies from the Russian monopolist Gazprom. Uniper has to replace the missing gas volumes with expensive purchases on the gas market in order to meet its obligations to customers and to continue to supply public utilities and commercial companies. Losses in the billions were therefore expected. Uniper has already tapped into gas storage facilities, which are currently being filled up to ensure the gas supply in winter. A domino effect was feared: If Uniper had gone bankrupt, customers, i.e. municipal utilities and industrial companies, would have gotten into serious difficulties. More bankruptcies could have followed.
Federal Minister of Economics Robert Habeck only promised rapid support for Germany’s largest gas importer on Thursday. The problem: the accruing losses cannot be permanently solved even with the state financial injection. The government is therefore now allowing Uniper to pass on the costs to its customers despite existing contracts. At the same time, a social balance should be created for end customers who are overwhelmed by the high prices. Habeck had already said that if there was a levy, there would also be relief.
It is the second largest group in Germany after VW
The Düsseldorf group had annual sales of 164 billion euros in 2021, making it the second largest German company after Volkswagen in terms of sales. In addition to gas trading, Uniper is also one of the largest electricity producers, operates coal and nuclear power plants and gas storage facilities. Uniper was spun off from the Eon Group in 2016 as a kind of bad bank in which all activities that were not part of Eon’s green future were bundled. Then, in a tough takeover battle, Fortum secured the majority of the shares. The company’s top employee representative recently warned that Uniper could become insolvent “within days”.
During the pandemic, the state had already saved the airline Lufthansa and the travel group Tui with a package worth billions. A large part of the aid has already been repaid, and the share package to Lufthansa is to be sold by 2023. During the 2008 financial crisis, the federal government became a shareholder in Commerzbank, and the stake is still there today.
The stabilization package for Uniper now provides for a capital increase of around EUR 267 million, the federal government is subscribing for shares at a price of EUR 1.70, well below the current price. This results in the federal government holding a stake of around 30 percent in Uniper, which means that Forum’s stake is diluted and falling. Furthermore, a mandatory conversion instrument of up to 7.7 billion euros is to be issued to the federal government. The issue will take place in tranches, as required by Uniper’s liquidity needs. The credits can later be converted into shares.
The company also said that the federal government had also explained to Uniper during the negotiations that from October 1, 2022, a general mechanism for passing on 90 percent of the replacement procurement costs for all importers as a result of Russian gas cuts should be introduced.