Fortum gets guarantee from Finnish shareholder that group will not be liquidated, in talks to extend loans

CHELYABINSK. Sept 2 (Interfax) - The principal shareholder of PJSC Fortum , Finnish energy company Fortum, provided a guarantee that it does not intend to liquidate the group, and the extension of the company's loans is being discussed, the Russian power company reported.

"In order to minimize uncertainty, in March 2022 the group received a letter of guarantee from its principal shareholder confirming the absence of intentions to liquidate the group, and also a letter from an affiliated lender on the extension of loans at least until March 31, 2023 and provision of the necessary support at least until March 31, 2023 on the condition that the affiliated party will have the ability to provide such an extension and financial support," the Russian company said in its financial statements. According to PJSC Fortum's IFRS financials for the first half of 2022, Finland's Fortum controlled 98.23% of the Russian company as of June 30, 2022.

As of June 30, an agreement had been signed to extend a loan of 13.529 billion rubles until June 30, 2023.

In addition, "negotiations are being held on signing an additional agreement to contracts [for loans] totalling 31.451 billion rubles that are due in 2022," so as to extend payments until September 29, 2023.

As of June 30, the group's short-term liabilities totalled 78.752 billion rubles, of which 65.027 billion rubles were owed to the affiliated party on provided loans. It was reported earlier that most of the Russian Fortum's short-term liabilities consisted of debt on credit and loans totalling 68.214 billion rubles, of which 8.448 billion rubles were offset in August 2022, and 32.253 billion rubles fall due before the end of 2022, including 31.451 billion rubles in loans received from Fortum Finance Ireland DAC.

PJSC Fortum includes seven thermal power plants in the Urals and Western Siberia. In addition, the company, with its joint ventures, is the largest player on the Russian renewable energy market, with projects totalling about 3.4 GW.

Fortum, one of the largest foreign investors in Russia's electricity sector, announced in May that it planned to leave the Russian market. Market insiders told Interfax that the company was collecting offers to buy its assets and planned to make a decision by the beginning of July, but there have not been any announcements of deals since then.

In addition to its controlling stake in PJSC Fortum (formerly TGK-10), Fortum also holds a 30% stake in Russian power company TGK-1 , the principal shareholder of which is Gazprom Energoholding. Fortum also owns 73.4% of Germany's Uniper, which owns 83.73% of Russian power company Unipro . The company is also involved in a number of renewable energy projects.