By Tom Käckenhoff and Emma-Victoria Farr
DUESSELDORF/FRANKFURT (Reuters) -Germany's Uniper said on Wednesday the government might take a controlling stake in the company as the ailing gas importer seeks further aid, paving the way for a what could result in a full nationalisation of the firm.
Uniper, Germany's largest importer of Russian gas, burned through its cash reserves sourcing gas on the expensive spot market after Moscow slashed flows to Germany, triggering a rescue package with Berlin agreed in July.
But that package, which has grown to 19 billion euros ($19 billion), is no longer enough, and Uniper needs more.
"The parties are looking into alternative solutions, inter alia a straight equity increase that would result in a significant majority participation by the German Government," Uniper said in a statement.
In July, Berlin said it would take a 30% stake as part of its bailout, details of which are still being discussed by the company, its majority shareholder Fortum and the government.
Uniper CEO Klaus-Dieter Maubach at the time flagged the possibility that the government could end up holding more than 50% of the company.
No decisions have so far been made beyond what was agreed in July, Uniper said on Wednesday. Its shares fell as much as 20.5% to an all-time low and closed down 18.3%. European ratings agency Scope also downgraded Uniper's credit rating to BBB- from BBB+.
Analysts at Bernstein estimate that Uniper may need an additional equity infusion of 4.5 billion euros, adding this would take the government's stake to 88% and dilute Fortum's holding to 8% from 78% now.
A person familiar with the matter said that Uniper's additional capital need could be more than 8 billion euros.
'THE ONLY SOLUTION: NATIONALISATION'
The economy ministry said it was in talks with Uniper, and Fortum also said talks with the German government continued.
"We want discussions to be successful, which is why we are not commenting," a spokesperson for the ministry said.
Bloomberg reported earlier in the day that the government could take a stake of more than 50%, citing sources familiar with the matter.
Uniper has secured 13 billion euros of credit lines from the state, most of which it has already drawn. It asked for more state help last month, raising the bill for its bailout to 19 billion euros.
"Nationalisation is the only solution left, Uniper's capital resources are totally under water. Mathematically speaking, there is nothing else that could be done," a source close to the matter told Reuters.
The state will take more than a 50% stake, likely even full ownership, the source said, adding there were few alternatives left.
Harald Seegatz, head of Uniper's workers' council and the group's deputy supervisory board chairman, said it would welcome the government taking a majority stake, noting the security that would provide to the workforce.
The cost of replacing falling gas imports from Russia's Gazprom (MCX:GAZP) after Moscow's invasion of Ukraine pushed Uniper to a loss of 12.3 billion euros for the first half of the year.
The company is weighing legal proceedings before a Swedish arbitration court to claim billions of euros in compensation from Gazprom over what it says are unjustified gas supply cuts, two people familiar with the matter told Reuters.
($1 = 1.0001 euros)