The German government agreed on Friday to take about a 30 percent stake in Uniper, one of the country’s largest natural gas suppliers that was on the brink of financial ruin, to keep energy supplies flowing and possible chaos in the European energy market. to ward off.
The Uniper bailout, the first time Germany used a new law to bail out companies deemed essential to the country’s critical gas supplies, is the latest example of the financial stress the war in Ukraine is causing in nearby European economies.
Germany faces its worst energy crisis in decades after Russia invaded Ukraine in February and Moscow steadily reduced the amount of gas it sends to Europe. The resulting rise in energy prices turned Uniper’s business model upside down, which imported more Russian natural gas than any other company in Germany.
As costs rose, the German government began to worry that Uniper’s failure could lead to a collapse of the entire system. Robert Habeck, Germany’s economy minister, recently compared this crisis to the way Lehman Brothers caused the global financial crisis. On Friday, he said the government would not allow a company like Uniper to go bankrupt and “risk jeopardizing the security of Germany’s energy supply”.
As part of the bailout, the German government expanded the credit it had granted Uniper to 9 billion euros ($9.2 billion), from €2 billion previously, and offered up to €8 billion in equity. The government also announced that it would allow energy suppliers to pass on higher costs to private and business consumers from October 1 to spread the burden as widely as possible.
“We will do everything that matters, today and for as long as it takes,” Chancellor Olaf Scholz told reporters in Berlin when he announced the bailout, as part of a wider package of measures to combat the energy crisis.
“We will ensure that no one is overwhelmed by the current situation,” said Mr Scholz.
Uniper’s stock price fluctuated wildly after the announcement, jumping first but later crashing as the details of the rescue dawned. The company has lost about 80 percent of its value this year, making it worth less than $3 billion, an amount much eclipsed by the money the government deemed necessary to bail it out.
The Berlin government has deliberately made the terms of the deal more stringent for shareholders and the company, based on a model it used two years ago to prop up German airline Lufthansa. It requires Uniper to use its own capital and operating profit before the government support kicks in.
That means Uniper will have to absorb up to 7 billion euros in losses, the company said in a statement. At a press conference on Friday, Uniper CEO Klaus-Dieter Maubach estimated such losses through September at $6.1 billion.
