E.ON bolsters finances with €1.35bn capital raising

German utility E.ON raised €1.35bn ($1.45bn) of new capital via a share issue, bolstering its finances ahead of big payments to the German government over the country’s nuclear legacy – and days after posting a record €16bn loss.

E.ON – which is transforming to a new business model based on renewables and networks – increased its capital after issuing more than two million shares sold by means of an accelerated bookbuilding process.

E.ON has to make a one-time payment of around €2bn for the agreement with the German federal government on the funding of the country’s phase-out of nuclear energy, followed by a payment in mid-2017 into a state-run nuclear energy fund of about €10bn. In return, the German federal government will assume responsibility for the intermediate and final storage of nuclear waste.

E.ON posts record $16bn loss on Uniper but sees brighter future

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“In view of the impact by the payment of the risk surcharge to Germany's state-run nuclear fund in mid-2017, the purpose of the capital increase is to strengthen the equity and liquidity basis of E.ON,” said the group.

As part of the transaction, E.ON agreed to a six months lock-up period with respect to any transaction related to its shares, including offering its shares to its shareholders in the context of a scrip dividend.

“At our annual press conference we announced that we will quickly implement measures to finance the risk premium. Just one day later we completed a capital increase successfully,” said E.ON finance chief, Marc Spieker.

“This transaction is the first step towards the implementation of our €7bn package, with which we will swiftly and decisively reduce our debt to around €20bn.”

E.ON had a record €16bn net loss last year, compared to net loss of €6.38bn in 2015, due to costs related to the spin-off of fossil generation unit Uniper.

The company, however, stressed that its core operating business remains robust and is set for a bright future focused on renewables.

E.ON kept a 47% minority share in Uniper, which since January 2016 has been operating as a separate legal entity.