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Uniper stock plunges after nationalisation confirmed

19:49, 16 September 2022

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A photo taken on July 22, 2022 shows the logo of energy supplier Uniper in the entrance hall at the company's headquarters in Dusseldorf, western Germany
Uniper stock fell nearly 30% after the German government confirmed it will take a controlling stake in the gas importer – Photo: Getty

The German government is set to take a controlling stake in Energy giant Uniper SE (UN01) after the natural gas importer was heavily impacted by Russia halting its exports of the commodity to Europe via the Nord Stream 1 pipeline, losing billions of euros.

Uniper SE (UN01) price chart

At the time of writing on Wednesday 21 September, Uniper’s share price plunged 25.77% to €3.10. Stock in the firm is down nearly 90% year-to-date.

The deal, which will save the group from bankruptcy, will see the German government take a 98.5% stake in the company, costing €8.5bn.

Uniper is currently controlled by Finnish state-owned energy company Fortum, which is the biggest buyer of Russian gas in Germany. Fortum said it has signed the agreement in principle.

“Fortum, the German government and Uniper have signed a further agreement in principle for a long-term solution that will allow the German State to take full control of Uniper to secure energy supply in Germany. Upon completion, the agreement enables Fortum to divest Uniper and refocus on clean Nordic power generation as its core business. It replaces the initial Uniper stabilisation agreement between the same parties, signed in July 2022,” Fortum said in a statement on Wednesday.

Fortum further noted that Uniper will issue 4.7 billion new ordinary registered shares, which the German State plans to subscribe at a nominal value of €1.70 per share.

“The German state-owned KfW bank will provide Uniper with additional liquidity support as required until this €8bn capital increase is completed,” Fortum added.

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In July, the German state took a 30% holding in the group as part of a rescue package – and credit lines were also extended to keep the company afloat. However, since the rescue deal in July, the energy crisis has escalated with Russia completely cutting off flows of natural gas to Germany via the Nord Stream 1 pipeline, putting Uniper under more pressure as it faces higher gas procurement costs.

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"As Russia does not honour its supply contracts, we have to buy this gas at a high price on the market. Uniper has borne the losses incurred almost alone since the supply cuts began in June of this year. As of mid-August, that is a total of over 5 billion euros – and it has continued to rise since. We are working at full speed with the German government on a permanent solution to this emergency as otherwise Uniper will no longer be able to fulfil its system-critical function for Germany and Europe,” Klaus-Dieter Maubach, Uniper’s chief executive said in a statement.

 

New Uniper projects in the pipeline

In a bid to turn around its fortunes, Uniper announced positive news on 5 September – that it had signed an agreement with Woodside Energy Trading Singapore Pte, one of the biggest liquified natural gas suppliers in Asia, for LNG supplies to Europe, for a term up to 2039, starting in January 2023.

“The quantity of LNG to be supplied under the new sale and purchase agreement is up to twelve cargoes per year (equivalent to more than 0.8 million tonnes per annum or one billion cubic meters of natural gas),” Uniper said in a statement.

Uniper also announced on 5 September that it was partnering up with JERA on a clean ammonia and LNG supply project to help meet Europe’s energy needs in the short and long-term.

“Both clean ammonia and LNG initiatives are tied to deliveries to JERA’s ammonia and LNG portfolio and Uniper’s demand in Germany and Northwest Europe,” Uniper said in a statement.

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