Dutch weigh TenneT Germany sale options after Berlin bails on grid purchase (updated)

Lammhults Design AB

20/06/2024 08:13

* 
      Berlin drops TenneT Germany deal over budget strains
    

        * 
      TenneT seeks another buyer or IPO for German arm  
    

        * 
      Germany could still buy minority stake - source
    

  
 (Adds German finance minister in paragraph 13, industry
reaction from paragraph 14, bond price in paragraph 21)
    By Toby Sterling and Rene Wagner
       AMSTERDAM/BERLIN, June 20 (Reuters) - The Dutch
government said on Thursday it would try to find another buyer
or seek an IPO for the German arm of its state-owned electric
grid company, after a sale to the German government foundered on
Berlin's budget strains. 
    The collapse of talks is a headache for grid company TenneT,
which is pursuing a 160 billion euro ($171 billion) investment
plan, Europe's largest, and will hamper both countries' efforts
to meet green energy targets. 
    In a letter to parliament, Dutch finance minister Steven van
Weyenburg said he was informed on Wednesday by German officials
that the deal for TenneT's German arm, estimated at 20-25
billion euros, would not go through.  
    He said he was disappointed by the news, given Berlin had
requested the deal itself in 2022 to facilitate its energy
transition. TenneT is the sole grid operator in the Netherlands
and the largest in Germany.
    "TenneT is preparing concrete options for a private sale, or
partial sale, or initial public offering of TenneT Germany," Van
Weyenburg wrote.
    "The German state has informed me it will support these
alternative scenarios."
    A German government source told Reuters a complete purchase
was off the table but Berlin might still buy a minority stake.
    TenneT said in a separate statement it intended to follow
through on its huge investment plan in the coming decade, much
of it needed to build the network to support wind farms in the
North Sea.   
    Both sides said they were close to a deal in 2023 before a
constitutional court verdict triggered a budget crisis in
Germany. 
    That led Dutch Prime Minister Mark Rutte to make a personal
plea to German Chancellor Olaf Scholz last month to make a bid
and relieve Dutch taxpayers from funding the German grid.
    TenneT said Germany's budget problems were squarely to blame
for the deal's failure.
    "This announcement comes after the Federal Government of
Germany informed the Dutch State that it cannot deliver on the
planned transaction due to budgetary challenges," it said.
    Reflecting disagreement over spending plans in Germany's
ruling coalition, Economy Ministry Robert Habeck said on
Thursday he was unhappy about not buying German businesses, when
asked about TenneT during a visit to South Korea.
    Germany's heavy industry, under pressure to replace fossil
fuels with renewable electricity, says transmission fees are
rising because the expansion of solar and wind energy has
created grid bottlenecks. 
    "An acceleration of grid upgrades must be given priority",
VIK, a lobby group for energy-intensive German manufacturers,
said, when asked to comment on the failed deal.
    The former CEO of chemicals giant BASF  BASFn.DE , Martin
Brudermueller, now chair of Mercedes-Benz  MBGn.DE , told daily
FAZ in March that Berlin should consider buying and subsidising
the entire national grid to revive the energy transition.
    Dutch finance minister Van Weyenburg said the Netherlands'
budget for 2024 faced a 1.6 billion euro shortfall, as expected
proceeds from the sale would not materialise, and the country
would have to seek short and long-term refinancing for TenneT.
    The Dutch government has already given TenneT a 25 billion
euro loan for 2024 and 2025.
    The company has around 20 billion euros in bond debt, and in
May the Dutch government estimated it needed 31 billion euros in
fresh equity, 13 billion on the Dutch side and 18 billion on the
German side. 
    TenneT bonds fell on Thursday, with a November 2026 bond
 XS2477935345=TE  down around half a cent at 95.7 cents on the
dollar, its lowest since November 2023, and its biggest daily
drop in a month.    
    ($1 = 0.9331 euros)

 (Reporting by Toby Sterling, Rene Wagner, Benoit Overstraeten,
Christoph Steitz and Ludwig Burger; Editing by Jason Neely and
Mark Potter)
 ((toby.sterling@thomsonreuters.com;))