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The German gas giant UNIPER collapses on the stock exchange: risk of bankruptcy and 11 billion in losses

Shares in German gas and energy utility Uniper plunged by a 20 Thursday after the company cut its earnings outlook and sought a possible bailout from the German government following the cut in supplies of natural gas from Russia, according to the Financial Times.

Uniper stated that earnings before interest and taxes will be "significantly lower" than in previous years, considering that it receives only 40% of NatGas from Russia's Gazprom PJSC. A company that lives by selling gas dies if it has no gas.

The recent decline in NatGas flows to Europe has forced Gazprom's main customer to hedge purchases on spot markets with a huge premium over NatGas' long-term contracts. At the same time, Berlin has imposed a ceiling on prices charged to households and businesses to control inflation, with the result that the company loses tens of millions of euros per day (RBC and Citigroup analysts estimate that the company loses 30 million euros a day) and risks imploding.

Bloomberg's Javier Blas said Uniper's losses in the NatGas sector could be as high as € 11 billion year-on-year if it were to continue buying on the spot market. He then pointed out that contagion risks could emerge, as other utilities are likely to do the same.

"Uniper is currently sourcing replacement volumes at significantly higher prices," Uniper said Wednesday, adding that since "it cannot pass on these additional costs yet, this entails significant financial burdens".

The Ministry of Economy confirmed that Berlin and Uniper are discussing "stabilization measures". Uniper also stated that talks are underway with the government to ensure liquidity, which could include "equity investments" and an increase in the credit line of 2 billion euros with the state bank KfW.

John Musk, an analyst at RBC Europe Ltd., said attention will focus on contagion and whether "other utilities with exposure to gas supply" will be affected by the supply crisis. The situation could worsen when Nord Stream cuts streams for ten days in July for a scheduled maintenance. There is growing fear that Russia will not be able to restore full capacity of the pipeline after the interruption.


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The article The German gas giant UNIPER collapses on the stock exchange: risk of bankruptcy and 11 billion in losses comes from ScenariEconomici.it .


This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/il-colosso-del-gas-tedesco-uniper-crolla-in-borsa-pericolo-di-bancarotta-e-11-miliardi-di-perdite/ on Thu, 30 Jun 2022 18:12:49 +0000.