Finland's biggest energy company, Fortum, said on Wednesday that it is continuing discussions with its German subsidiary Uniper and the German government on a long-term solution for the financially strapped firm.
The majority-state-owned Fortum bought a majority share in the German fossil-fuel giant in 2019, eventually raising its stake to 78 percent.
After Moscow slashed gas flows to Germany, Uniper has been forced to burn through its cash reserves sourcing expensive alternative supply on the spot market.
In July, as skyrocketing fossil gas prices caused Uniper to lose millions of euros every day, the German state agreed to buy a 30 percent stake in Uniper, while offering the firm up to 7.7 billion euros in financing. Uniper is the country's biggest gas importer.
Now the German state could become Uniper's majority owner and perhaps even fully nationalise it in order to fend off a collapse of its energy system, Bloomberg reported on Wednesday.
The agreement reached between Fortum, Uniper and Germany has not been enough to stabilise the subsidiary amid surging gas prices and Russian supply cuts.
The company has already secured 13 billion euros of credit lines from the state, most of which it has already drawn. Last month it asked for more state help, raising the bill for its bailout to nearly 20 billion euros.
"Nationalisation is the only solution left"
Chancellor Olaf Scholz’s administration is ready to increase its stake above the 50 percent threshold while a full nationalization is also under discussion – a decision that Fortum would have to agree to. Germany, which previously said it would not buy out Fortum's stake, is still in talks with the Finnish government, reports Bloomberg.
The Finnish Minister for Ownership Steering, Tytti Tuppurainen (SDP) told commercial broadcaster MTV in the afternoon that Finland would not accept the nationalisation of Uniper without compensation.
"Nationalisation is the only solution left, Uniper's capital resources are totally under water. Mathematically speaking, there is nothing else that could be done," a source close to the matter told news agency Reuters.
Uniper confirmed on Wednesday that one of the options being discussed is the German government taking a “significant majority” stake.
Stock hits all-time low
Uniper shares hit an all-time low, falling by nearly 10 percent on Wednesday afternoon in Frankfurt after earlier surging by more than 10 percent.
Fortum was the most heavily traded stock on the Helsinki Stock Exchange on Wednesday, with its value edging down by about one percent after rising more than seven percent. It ended the day up 1.86 percent.
The Finnish utility said on Wednesday that no decisions have been made “beyond what was agreed in the stabilisation package in July” but added that “alternative solutions” were being considered.
“The deteriorating operating environment and Uniper’s financial situation have to be taken into account while Fortum, the German government and Uniper continue their discussions on a long-term solution,” Fortum said, adding that it would “update the market as and if necessary.”