Germany’s plan to recapitalize Uniper, a German natural gas trader, was approved by the European Commission subject to further divestment and management compensation.
In a statement, the Commission stated that the plan conforms to EU rules regarding state aid on size, necessity and appropriateness.
It stated that the measure was designed to restore Uniper’s financial situation and liquidity in an exceptional circumstance caused by Russia’s aggression against Ukraine, and subsequent disruptions of gas supplies. However, it also included the safeguards necessary for limiting competition distortions.
It added that the recapitalization involves an immediate cash capital rise of 8 billion euro, and will be subscribed for at 1.70 euros each share.
The approved capital was also up to 26.5 million euros. Germany plans to make payments in phases through 2024. Wednesday’s announcement of the first tranche at 5.54 billion saw Germany pay the first tranche. The difference in Uniper’s cost to buy gas at higher prices and the price it paid under long-term agreements with Russian suppliers is what determines the share price.
Uniper shares rose 2.6%
According to the Commission, Germany has committed to a credible exit strategy for 2023. It aims to decrease its Uniper shareholdings to no more than 25% and one share by 2028.
Uniper’s board members will have to be paid a strict salary limit, which includes a ban of bonus payments, until the exit strategy has been completed. Uniper also must contribute 30 percent a year to its adjusted operating profits, which excludes gas replacement costs. This is between 2022-2024.
Uniper cannot buy shares in any other company until 2026 unless it is absolutely necessary to maintain its viability over the long term.
Uniper must sell parts of their business to preserve its competitiveness. This includes the Datteln IV power station in Germany and the Gonyu energy plant in Hungary. Uniper will also release some of its pipeline capacity and gas storage bookings to other companies.
Uniper stated that other requirements included the sale of Uniper’s 84% Russian Unipro stake (UPRO.MM), its German district heating company, stakes in OPAL and BBL pipelines, as well as its 18% stakes in Latvijas Gaze, GZE1R.RI.
Additional conditions are the sale Uniper’s international helium and marine fuels businesses Uniper Energy DMCC. This business operates a Fujairah low-sulphur marine oil production facility.
We will make every effort to locate the right owners of the businesses and assets to be sold. We have cleared the final hurdle, and we now know how Uniper will be managed,” said Maubach.
Berlin’s Uniper rescue which cost over 50 billion euro and is expected to lead to total nationalization, was cleared by EU competition regulators Friday, but required approval from EU executive for state aid.
The Commission stated that Uniper is Germany’s biggest gas supplier and one of Europe’s most important gas traders.
Out of approximately 900, it supplies electricity and gas to more than 420 German municipal utilities. This company is Europe’s fourth largest gas storage firm, representing 25% of Germany’s total.