Germany provides Siemens Energy with €7.5bn in state guarantees
The guarantees are part of a rescue package worth €15bn for the troubled energy company
Berlin/Munich — The German government on Tuesday said it had decided to backstop Siemens Energy with guarantees worth €7.5bn as part of a deal with other stakeholders to help the troubled energy company fulfil its order book.
Deepening problems at the firm's wind turbine unit Siemens Gamesa and a subsequent move by S&P to cut the group's long-term credit rating to BBB-, just one notch above junk, during the summer had made banks more reluctant to provide guarantees.
Siemens Energy in October disclosed talks with the government, banks and former parent Siemens AG over what sources said were guarantees for project and warranty bonds needed to safeguard the firm's €109bn order book.
“The group has a problem as a result of the takeover of the Spanish company Gamesa, faulty wind turbines, which has put the company, which is otherwise in good health and has full order books, in a precarious situation,” Economy Minister Robert Habeck said.
Berlin's decision to step in reflects its view of Siemens Energy, which makes gas and wind turbines as well as large converter states, as a maker of vital equipment for the country's transition away from polluting fossil fuels.
The guarantees are part of a package totalling €15bn agreed with private banks and other stakeholders and would also impose a pause on dividends and higher level bonuses at Siemens Energy, the economy ministry said in a statement.
Private banks were expected to provide Siemens Energy with guarantees worth €12bn while Siemens Energy would seek another €3bn from other sources, the statement said, adding it was conditional on the final sign-off of all parties.
The €3bn in guarantees are likely to come from international stakeholders such as Denmark and Spain, where Siemens Energy has a significant presence, two people familiar with the matter said.
The government will provide the €7.5bn as a counter guarantee to the private banks in order for them to come through, the statement said.
“We are pleased with the German government’s clear support for Siemens Energy and the commitment to the rapid implementation of projects to make the energy transition a success,” Siemens Energy said in a statement.
“We will provide further details at our annual press conference on November 15.”
In a separate statement, Siemens said it had been working to find a solution and would share further details later.
Shares in Siemens and Siemens Energy closed up 2.75% and 2.95%, respectively, following the news.
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