Uniper Secures $11 Billion of Credit to Cope with Gas Volatility
FRANKFURT (Reuters) — German utility Uniper has secured credit facilities worth up to 10 billion euros ($11 billion) from parent Fortum and state bank KfW in a move to cope with unprecedented volatility in energy markets, it said.
Uniper, in which Finland's Fortum owns more than 76%, said as part of the measures it had also drawn 1.8 billion euros of credit facilities from its core banks, which it said late on Tuesday was the full amount.
"The reason for these additional financial instruments is the unprecedented price increases of - in some cases - several hundred percent within a few months in a highly volatile market environment," Uniper finance chief Tiina Tuomela said.
Larger rival RWE, when asked about whether it too had to secure additional funding headroom, said it had made arrangements to cope with the situation via credit lines and other funding instruments, without providing further detail.
European gas prices have rocketed amid an economic recovery from the pandemic, low storage levels and speculation around supplies from Russia, Europe's biggest provider of natural gas, piling pressure on energy firms and consumers alike.
Wholesale and exchange-based commodity markets routinely require down payments to cover operators' open liabilities.
Fortum, in a separate statement, said European gas prices had risen up to 1,000% to unprecedented levels in December.
Shares in Uniper, which is among the financial backers of Russia's Nord Stream 2 pipeline, fell as much as 3.3% on the refinancing, which traders said was larger than expected.
"Also, it does not sound as if a Fortum squeeze out bid is imminent," a trader said, referring to a possible offer for minority shareholders which the Finnish company can now pursue after a self-imposed restriction expired last week.
Fortum shares were down as much as 3.4%.
Uniper said that while the credit facility provided by Fortum had been partly used, the KfW loan had not, adding overall these steps would give it financial flexibility in "potentially extreme" market conditions.
While the price volatility increases the need for security payments, it also raises the value of Uniper's gas and power assets, the company said, adding its earnings prospects were not adversely impacted.
"Economically, Uniper is a very healthy company," Tuomela said. "Nevertheless, we consider the agreements announced today to be useful as precautionary measures to increase our liquidity headroom."
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