Finland backs Fortum with €2.35 billion in funding

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The sign of Finnish energy company Fortum is seen at its headquarters in Espoo, Finland July 17, 2018. REUTERS/Ints Kalnins/File Photo

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HELSINKI, Sept 6 (Reuters) – Finnish firm Fortum (FORTUM.HE) said on Tuesday it has signed a bridge financing deal with Finnish government investment firm Solidium for 2.35 billion euros ($2.34 billion). dollars) to cover warranty needs in the Nordic energy market.

Finland’s government on Sunday unveiled plans to offer up to €10 billion in guarantees to the power industry after Russia’s Gazprom shut down the Nord Stream 1 gas pipeline, deepening energy shortages in Europe. Read more

“The ongoing energy crisis in Europe is caused by Russia’s decision to use energy as a weapon and it also seriously affects Fortum and other Nordic power producers,” chief executive Markus Rauramo said in a statement. a statement.

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His comments echo a similar view from the CEO of German unit Uniper of Fortum (UN01.DE) and accusations from Europe that Russia is weaponizing energy supplies in retaliation for Western sanctions imposed on Moscow over the war in Ukraine. Russia says the West has launched an economic war and the sanctions have caused gas supply problems. Read more

Soaring gas and electricity prices driven by a drop in gas flows from Russia since its invasion of Ukraine have put a strain on utilities, including Uniper, which has sought a multi-billion bailout. euros to the German government.

Fortum said it currently has enough cash to meet collateral needs and would only withdraw the funds as a last resort.

“The arrangement aims to strengthen Fortum’s cash reserves and thereby secure Finland’s energy supply,” the government said in a separate statement.

The first installment of the one-year loan would be 350 million euros and it must be withdrawn by September 30 for the arrangement to remain effective, Fortum said.

The effective annual interest cost for bridge financing, including arrangement and commitment fees, would be 14.2%, he added.

Solidium would also get an option to buy an additional 1% of Fortum’s shares, raising the state’s stake to 51.26%, the power company said.

($1 = 1.0042 euros)

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Reporting by Essi Lehto, editing by Terje Solsvik and Emelia Sithole-Matarise

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