European Commission clears Germany’s Uniper bailout By Reuters

PARIS/FRANKFURT (Reuters) -The European Commission said it had approved Germany’s 34.5 billion euro ($36.60 billion) plan to recapitalise German trader Uniper, subject to future divestment, management pay and acquisitions.

The plan complies with EU state aid rules on the necessity, appropriateness and size of the intervention, the Commission said in a statement.

“The measure aims at restoring the financial position and liquidity of Uniper in the exceptional situation caused by Russia’s war of aggression against Ukraine and the subsequent disruption of gas deliveries, while maintaining the necessary safeguards to limit competition distortions,” it said.

The recapitalisation involves an immediate cash capital increase of 8 billion euros, which will be subscribed at a price of 1.70 euros per share, it added.

It also approved authorised capital of up to 26.5 billion euros, which Germany intends to pay in stages through to 2024, with the first tranche of 5.54 billion announced on Wednesday. The share price is linked to the difference between Uniper’s costs to purchase gas at higher market prices, and its price under previous long-term contracts with Russian suppliers.

Uniper shares were up 2.6%.

The Commission said Germany had committed to work out a credible exit strategy by end 2023, aiming to reduce its Uniper shareholding to not more than 25% plus one share by end 2028 at the latest.

Until this exit strategy is completed, Uniper board members’ remuneration will be subject to strict limitations, including a ban on bonus payments. Uniper must also contribute 30% a year from its adjusted operating profit, excluding gas replacement costs, between 2022 and 2024.

‘LAST HURDLE’

Until the end of 2026, Uniper may not buy stakes in other companies unless essential to ensure its long-term viability.

To preserve competition, Uniper will have to divest parts of its business, including the Datteln IV power plant in Germany, and the Gonyu power plant in Hungary, and will release parts of its gas storage and pipeline capacity bookings to competitors.

Other requirements include the disposal of Uniper’s 84% stake in Russia’s Unipro, along with its German district heating business, its North American power business, its stakes in the OPAL and BBL pipelines as well as an 18% stake in Latvijas Gaze, Uniper said.

Further conditions include the sale of Uniper’s international helium business as well as its marine fuels business Uniper Energy DMCC, which operates a low sulphur marine fuel oils production site in Fujairah.

“We will do everything in our power to find the best owners for the assets and businesses to be sold. With the EU approval we have taken the last hurdle and now we know the conditions under which we will shape the future of Uniper,” Maubach said.

Berlin’s Uniper rescue, which has so far cost more than 50 billion euros and will essentially lead to full nationalisation, won clearance from EU competition regulators on Friday but still required state aid approval from the EU executive.

Uniper, majority-owned by Finland’s Fortum Oy, is Germany’s largest gas provider and one of Europe’s main gas traders, the Commission said.

It provides electricity or gas to over 420 local municipal utilities in Germany, out of a total of around 900. It is also Europe’s fourth-largest gas storage company, accounting for about 25% of Germany’s total.

($1 = 0.9427 euros)