Credit line

KfW ready to extend credit line to Uniper as gas losses mount – sources

Gas flames from a stove are pictured in a private house, as the Russian invasion of Ukraine continues, in Bad Honnef near Bonn, Germany March 30, 2022. REUTERS/Wolfgang Rattay/File Photo

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FRANKFURT, Aug 24 (Reuters) – German public lender KfW (KFW.UL) is ready to provide a line of credit to struggling gas importer Uniper (UN01.DE) to offset losses that have accelerated with soaring fuel prices, two people familiar with the issue said Wednesday.

Uniper, hit by the cost of trying to replace reduced Russian gas supplies, reached an initial 15 billion euro ($14.9 billion) bailout deal with the German government in July, including a line loan of 9 billion euros from KfW, of which 5 billion have already been drawn. Read more

This line could be increased as a support measure to take account of a much larger increase in gas prices than expected at the start of bailout talks in June, the sources said.

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Details of the bailout are still being discussed and a term sheet is expected to be signed in mid-September, the sources said, adding that other options were also being discussed and KfW may not have need to increase the line.

Frankfurt-listed Uniper shares extended losses after the news and fell 4.2%.

Germany’s economy ministry currently sees no need to adjust Uniper’s rescue package, a spokesperson said, adding it was unclear how the situation would develop in the future. Read more

Both KfW and Uniper declined to comment.

Uniper has been forced to buy gas on the spot market where prices have soared to fill a shortfall in deliveries from Russia, which has reduced flows through the Nord Stream 1 pipeline since mid-June.

Uniper’s gas losses stood at 3.8 billion euros as of August 17 and, according to comments from finance chief Tiina Tuomela last week, are growing by around 100 million euros every day.

At the current rate, this will amount to 8.2 billion euros by October 1, when a gas tax comes into force that will allow Uniper to pass on most of the higher gas costs to customers. and massively reduce losses. Read more

That would be above the €7 billion threshold above which the German government has pledged to cover losses, although the mechanism by which it would do so still needs to be clarified, the sources said.

They added that raising the gas tax could also help cushion the blow.

“At the end of June, when we started negotiations, we expected that the safety net would not be reached at all,” Uniper chief executive Klaus-Dieter Maubach told reporters last week after presented a loss of 12.3 billion euros in the first half. Read more

Maubach said the worst-case assumption at the time was that the safety threshold would be reached some time after the gas royalty came into effect. “But now it is clear that it will be achieved sooner.”

($1 = 1.0059 euros)

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Additional reporting by Andreas Rinke; edited by Kirsten Donovan and Marguerita Choy

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