German company Uniper faces bankruptcy after Russian gas cut-off
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German Chancellor Olaf Scholz pledges to help the troubled energy giant Uniper after facing bankruptcy.
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German Uniper company faces bankruptcy after Russia cuts gas.
German Chancellor Olaf Scholz vowed Friday to support the bankrupt energy business Uniper, which had requested a bailout from the government to deal with soaring natural gas prices caused by the Western sanctions on Russia.
Uniper said in a statement that the "stabilization steps" it is seeking are "aimed at halting the current accumulation of significant losses, meeting Uniper's liquidity needs, and protecting Uniper's investment-grade credit rating." Scholz guaranteed the company, Germany's top buyer of Russian gas, the government's support.
“This is a company that is of great importance to large parts of the economy and to many consumers,” he said during a visit to a trade fair in Munich. “Everyone can be sure: we will play our part to save Uniper.”
Read next: Berlin says it won't allow energy company Uniper to go bankrupt
The company said its major shareholder, Finland-based Fortum, was also in talks with the German government to “address the negative impact of the current gas supply restrictions on Uniper.”
“Fortum’s proposal includes a restructuring of Uniper aiming at establishing a security of supply company under the ownership of the German government,” it said.
It seems that some of the countries pushing for sanctions on #Russia are the biggest importers of Russian fossil fuel.
— Al Mayadeen English (@MayadeenEnglish) July 3, 2022
Here are the top importers of #Russian fossil fuel and countries that cut their reliance on Russia.#Ukraine #NATO #EuropeanUnion pic.twitter.com/2IBFd13s6A
While the government may purchase a big portion of Uniper in order to keep it solvent or allow it to pass on higher purchasing costs to customers, Economy Minister Robert Habeck stated on Friday that the next steps were still being evaluated.
Read next: German banks prepare for energy-related defaults: Bloomberg
“We won’t let a systemically relevant company become insolvent and cause turbulences on the global energy markets,” he said. “We will act.”
Last week, Uniper reduced its financial outlook for this year, citing a major decline in gas supply by Russia's Gazprom in recent weeks, requiring it to seek substitute supplies at much higher prices. “Since Uniper cannot yet pass on these additional costs, this results in significant financial burdens,” it said at the time.
Germany activated the second step of its three-stage emergency gas supply plan last month. When the third phase is activated, the government will be able to choose which sectors and businesses gas suppliers must prioritize, which is effectively state energy rationing.
