European Commission approves Germany’s Uniper lifeline | Popgen Tech

PARIS, Dec 20 (Reuters) – The European Commission said on Tuesday it had approved Germany’s 34.5 billion euro ($36.60 billion) plan to recapitalize German natural gas trader Uniper ( UN01.DE ), subject to future divestment, management payments 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 to restore 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 supplies, while maintaining the necessary safeguards to limit competition distortions, ” reads the measure.

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

It also approved authorized capital of up to 26.5 billion euros, which Germany intends to pay in stages until 2024. The share price is linked to the difference between Uniper’s cost of buying gas at higher market prices, and its price under previous long-term contracts with Russian suppliers.

Uniper’s chief executive said last week that he expected Brussels to clear the state aid with conditions.

The Commission said that Germany had committed to work out a credible exit strategy by the end of 2023, which aims to reduce its Uniper shareholding to no more than 25% plus one share by the end of 2028 at the latest.

Until this exit strategy is completed, Uniper directors’ remuneration will be subject to strict restrictions, including a ban on bonus payments.

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

To remain competitive, Uniper will have to sell 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 reservations to rivals.

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

Uniper, which is majority-owned by Finland’s Fortum Oy ( FORTUM.HE ), is Germany’s biggest gas supplier and one of Europe’s main gas traders, the Commission said.

It supplies electricity or gas to more than 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 around 25% of Germany’s total.

($1 = 0.9427 euros)

Reporting by GV De Clercq; editing by Grant McCool and Richard Chang

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