August 21, 2019 / 2:29 PM / a month ago

Uniper workers urge Fortum to spell out future plans to allay downgrade fears

DUESSELDORF, Germany (Reuters) - Labor representatives at Uniper (UN01.DE), fearing a ratings downgrade in the event of a full takeover of the German energy group, have called on major shareholder Fortum (FORTUM.HE) to lay out plans for future cooperation between the two companies.

FILE PHOTO: The logo of German energy utility company Uniper at its headquarters in Duesseldorf, Germany, March 8, 2018. REUTERS/Thilo Schmuelgen

It is the latest attempt to break a deadlock in Uniper and Fortum’s long-running talks over their future relationship strained by the Finnish group’s efforts to acquire a majority in Uniper against its will.

Russian regulators also bar Fortum from raising its stake from the current 49.99% in Uniper because of a water license the German group operates there, which, according to local law, cannot be majority owned by a state-owned entity.

On Tuesday, ratings agency S&P said that Fortum acquiring more of Uniper could be negative for the ratings of both groups. Currently, S&P has a ‘BBB’ rating on both Uniper and Fortum, two notches above junk.

“The S&P report confirms our fears that Fortum has bitten off more than it can chew through the takeover of Uniper,” Holger Grzella, Uniper’s deputy works council head, told Reuters on Wednesday.

“We want to avoid a further negative impact on Uniper at all costs.

Workers fear that Fortum Chief Executive Pekka Lundmark could break up the group if he gets a majority, something Fortum has denied. They accuse him of not being clear about his future intentions with regard to Uniper.

“We have made a constructive proposal for a cooperation on the basis of the status quo. Lundmark has simply ignored it,” Grzella said.

“It is high time to leave the destructive path taken by Mr Lundmark and work together constructively on the basis of the status quo (no stake increase),” he said.

Lundmark regularly meets with his counterpart at Uniper, Andreas Schierenbeck, who said earlier this month that talks were constructive but complex, with less flexibility with respect to the water license.

Activist fund Knight Vinke, which owns 5.02% in Uniper, said it would call an extraordinary general meeting in September to table a spin-off of Uniper’s Russian operations if the two companies remain in deadlock.

Reporting by Tom Kaeckenhoff,; Writing by Christoph Steitz; editing by Emelia Sithole-Matarise

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