Business credit

Uniper obtains $ 11 billion in credit to deal with gas volatility

The logo of German energy distribution company Uniper SE is pictured at the company’s headquarters in Düsseldorf, Germany, March 10, 2020. REUTERS / Thilo Schmuelgen

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  • Uniper obtains an 8 billion euro line of credit from Fortum
  • Additional facility of € 2 billion from KfW
  • The move is a response to extreme market volatility
  • Uniper shares fall 2.7%, Fortum down 3.3%

FRANKFURT, Jan. 5 (Reuters) – German utility Uniper (UN01.DE) has secured credit facilities worth up to € 10 billion ($ 11 billion) from parent company Fortum (FORTUM .HE) and state-owned KfW Bank (KFW.UL) as a precaution move amid highly volatile energy markets, he said.

Uniper, of which Finland’s Fortum owns more than 76%, said as part of the measures it had also drawn down € 1.8 billion in credit facilities from its major banks, which it said on Tuesday evening was it was the total amount.

“The reason for these additional financial instruments is the unprecedented price increase of – in some cases – several hundred percent in a matter of months in a very volatile market environment,” said Uniper CFO Tiina Tuomela .

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European gas prices have skyrocketed amid an economic recovery from the pandemic, low levels of storage and speculation around supplies from Russia, Europe’s largest natural gas supplier, putting pressure on energy companies and consumers.

Wholesale and commodity stock markets regularly require down payments to cover traders’ open liabilities.

Fortum, in a separate statement, said European gas prices rose by up to 1,000% to all-time highs in December.

Shares of Uniper, which is one of the backers of Russia’s Nord Stream 2 pipeline, fell 2.7% on refinancing, which traders said was larger than expected.

“Further, it does not appear that a Fortum takedown offer is imminent,” said one trader, referring to a possible offer for minority shareholders that the Finnish company can now pursue after a restriction expires. self-imposed last week.

Fortum shares lost as much as 3.3%.

Uniper said that while the credit facility provided by Fortum had been partially utilized, the KfW loan had not been, the aggregate addition of these measures would give it financial flexibility under “potentially extreme” market conditions.

As price volatility increases the need for security payments, it also increases the value of Uniper’s gas and power assets, the company said, adding that its earnings outlook had not been affected.

“Economically, Uniper is a very healthy company,” said Tuomela. “Nonetheless, we believe that the agreements announced today are useful as precautionary measures to increase our liquidity margin.”

($ 1 = € 0.8859)

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Reporting by Christoph Steitz and Vera Eckert Editing by Alex Richardson and Mark Potter

Our standards: Thomson Reuters Trust Principles.

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