German government grants Siemens Energy a loan guarantee to help secure the company
The German government says it is granting a 7.5 billion-euro ($8 billion) loan guarantee to energy technology company Siemens Energy as part of a package to help the firm
BERLIN (AP) — The German government said Tuesday it is granting a 7.5 billion-euro ($8 billion) loan guarantee to energy technology company Siemens Energy as part of a 15 billion-euro 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 Oct. 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 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 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 2 billion euros for Siemens Energy, the ministry said.
Siemens Energy won't be able to offer a dividend or pay bonuses to its management while the measures are under way.
