The bridging financing agreement with the Finnish state will cover the distressed energy company’s collateral needs in the Nordic electricity commodity market.
Fortum, Finland’s majority state-owned energy company, has announced the signing of a bridging financing agreement with the Finnish state worth €2.35 billion.
The financing arrangement will cover the company’s collateral needs in the Nordic electricity commodity market, Fortum said in a statement released on Tuesday morning. The deal allows Fortum to borrow money from Finnish state-owned holding company Solidium, with the duration of the liquidity facility set at one year.
“The bridge financing is being put in place now in accordance with the timetable and conditions set by the Finnish state, but the use of the arrangement is a last resort for Fortum,” the statement said.
The first tranche of the loan – a minimum of 350 million euros – must be drawn down by the end of this month at the latest for the arrangement to remain in force. The last tranche can be drawn no later than March 31, 2023.
Fortum’s statement further noted that a 10% margin will be paid on top of the six-month Euribor interest rate for the first six months of the agreement, with the margin increasing to 12% for the second six-month period. month.
The overall effective annual rate, including administration fees and commission, will therefore be 14.2%.
The Finnish state holds a majority stake (50.76%) in Fortum, as the government said during budget talks last week that loans and state guarantees would be offered to the energy sector to ensure the smooth running of market operation this fall and winter.
On Monday, the Finnish government proposed an emergency support plan of 10 billion euros for companies in the energy sector. The loans and loan guarantees aim to secure the functioning of the electricity market, the Minister of Finance said. Annika Saarikko (Cen) said.
Fortum posted a net loss of 7.4 billion euros in the second quarter last month, leading the company to seek government assistance.
Speaking to reporters on Tuesday afternoon following the announcement of the deal, Finland’s Minister for European Affairs and Property Directorate Tytti Tuppurainen (SDP) said the deal was being prioritized by the government because of the economic fallout caused by Russia’s war in Ukraine.
“Finnish electricity companies should not be brought to their knees because of Putin,” she said.
This week’s episode of All Points North looked at the energy crisis that Finland will face over the coming fall. You can listen to the show using the built-in player here at Yle Areena, Spotify (siirryt toiseen palveluun), Apple podcast (siirryt toiseen palveluun), or wherever you get your podcasts.
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