Germany Extends $15-B Bailout For Uniper

The German government has intervened to save Uniper with a 15-billion-euro ($15.28 billion) bailout on Friday, July 22, 2022, after the gas importer became the greatest casualty of Europe's energy dispute with Russia thus far, according to Reuters' Christoph Steitz, Essi Lehto, and Holger Hansen.

Photo Insert: According to the terms of the agreement, Germany will purchase 157 million new ordinary Uniper shares for 267 million euros and make available capital of up to 7.7 billion euros in exchange for the issuance of required convertible instruments.

The government will take a 30 percent interest in Uniper as part of a bailout that is among the largest in German business history, lowering the holding of its Finnish parent Fortum to 56 percent from over 80 percent following weeks of difficult negotiations.

It would also allow Uniper to begin passing on part of the expenses of rising gas prices to consumers in the coming months, which German Chancellor Olaf Scholz said would be countered by increased welfare help to protect lower-income people.

The bailout highlighted how Russia's invasion of Ukraine in February has enormous ramifications for governments across Europe, who are grappling with skyrocketing energy costs and fears of acute gas shortages during peak demand winter months. Following the announcement, Uniper shares fell more than 30% to new lows. Shares of Fortum were down 3%.

"We are living through an unprecedented energy crisis that requires robust measures," Fortum CEO Markus Rauramo said, adding that the agreement reflected the interests of all parties.

"We were driven by urgency and the need to protect Europe's security of supply in a time of war."

Chancellor Scholz implored the country to come together at a news conference, recalling the popular song lyric "you'll never walk alone" in English, when announcing the Uniper rescue.

According to the terms of the agreement, Germany would purchase 157 million new ordinary Uniper shares for 267 million euros and make available capital of up to 7.7 billion euros in exchange for the issuance of required convertible instruments.

Furthermore, state-lender KfW will increase its existing loan line by 7 billion euros, bringing the total to 9 billion euros.

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