German state to provide over €7 billion in guarantees to safeguard Siemens Energy - media report
Reuters / n-tv
The German state and a number of banks have agreed to support Siemens’ financially struggling subsidiary Siemens Energy with guarantees of about 12 billion euros, news agency Reuters said in article published by n-tv. The deal will likely be made official at the company’s quarterly reporting on 15 November, the news agency said. The state will provide guarantees for at most 7.5 billion euros to Siemens Energy. The amounts, together with the remainder being provided by credit institutions, will allow the company to carry out large-scale investments in new projects and achieve financial autonomy again. The former parent company Siemens, which still holds a quarter of its spin-off’s stocks, will not provide any guarantees but will instead enter into a deal to buy a large stake in an Indian subsidiary worth 2 billion euros that will inject more liquidity in Siemens Energy’s books, the article said. “This was a precondition for others to provide guarantees in the first place,” a source involved in the negotiations said. Siemens Energy had initially called for guarantees worth 15 billion euros, but it remains unclear whether the full amount can be reached. A spokesperson for the government said negotiations are ongoing, declining to comment further.
Siemens Energy had approached the state due to increasing financial difficulties and inability to secure new funding on capital markets, arguing that international competitors also benefit from generous state support. The company is an important provider of energy transition equipment but has struggled to make key components of its business profitable, notably the German-Spanish wind power turbine joint venture Siemens Gamesa. It recently opened a major electrolyser factory for hydrogen production in Berlin, which chancellor Olaf Scholz hailed as a milestone for German and European ambitions to take the lead in this budding field of low-carbon technology.