EC clears German bailout of Uniper

The European Commission on Tuesday approved a €34.5bn German government plan to recapitalise natural gas trader Uniper.

It said the measure notified by Germany met conditions on the necessity, appropriateness and size of the intervention under EU State aid rules.

“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 in a statement on Wednesday.

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

It also approved authorised capital of up to €26.5bn, which Germany plans to pay in stages through to 2024. 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.

Germany has also committed to work out a credible exit strategy by the end of next year, and plans to reduce its Uniper shareholding to not more than 25% plus one share by end 2028 at the latest.

In the interim, pay for Uniper board members will be subject to strict limitations, including a ban on bonus payments.

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.

Reporting by Frank Prenesti for Sharecast.com