German government grants loan guarantee to Siemens Energy
14 November 2023, 15:54
Siemens Energy sought help from the government as it struggles with problems at its Gamesa wind energy subsidiary.
The German government has said it is granting a 7.5 billion euro (£6.5 billion) loan guarantee to energy technology company Siemens Energy as part of a 15 billion euro (£13 billion) package to help the firm, an important player in the transition to renewable energy sources.
Siemens Energy sought help from the government as it struggles with problems at its Gamesa wind energy subsidiary, including quality issues with previously installed wind turbines.
The company said on October 26 that “the strong growth in order intake, particularly in the former gas and power business areas, leads to a rising need of guarantees for long-term projects”.
It said it was in talks with partners, including the government, to ensure access to guarantees “to facilitate the anticipated strong growth”.
The government held talks with Siemens Energy, industrial conglomerate Siemens AG – which spun off Siemens Energy in 2020 and retains a minority stake in the company – and with private banks.
The Economy Ministry said on Tuesday that the government’s precondition for helping was “that all stakeholders participate appropriately in safeguarding the company”.
It said the outcome was a package of 15 billion euros in guarantee lines, of which private banks would provide 12 billion euros (£10.4 billion) and with Siemens Energy securing the rest in negotiations with “further stakeholders”.
The government agreed to backstop the bank guarantees to the tune of 7.5 billion euros.
In addition, Siemens Energy and Siemens AG plan to negotiate the sale of shares in a joint venture that would bring in about two billion euros (£1.7 billion) for Siemens Energy, the ministry said.
Siemens Energy will not be able to offer a dividend or pay bonuses to its management while the measures are under way.
