EON SE, Germany’s biggest renewable energy producer, raised about 1.35 billion euros ($1.45 billion) through a share offering that’ll help it reduce debt and pay for nuclear waste storage.
The Essen-based utility sold 200.1 million shares, increasing its total shares by about 10 percent, according to a statement issued late Thursday.
EON and the country’s three other atomic operators agreed in 2016, after more than a year of talks with the national government, to pay 23.6 billion euros to store nuclear waste. The proceeds of EON’s offering will help the power generator close the 2 billion-euro gap between what it has already set aside for cleanup after Germany phases out nuclear power by 2022 and what it owes as a one-time payment.
“The capital raising went well,” said Ahmed Farman, an analyst in London at Jefferies International Ltd. “It’s partly solved the balance sheet problem.”
EON rose as much as 2.2 percent to 6.981 euros and traded at 6.939 euros at 10:03 a.m. in Frankfurt. The utility has gained 3.5 percent this year, beating the Stoxx Europe 600 Utilities Index, but lagging behind Germany’s DAX.
Read more here about how the nuclear operators plan to fund the exit
EON said Wednesday that it plans to shrink its net debt by about 24 percent to 20 billion euros. The utility may allow investors to receive dividends as shares instead of cash and sell non-strategic assets. Its net loss for 2016 widened by 21 percent to a record 8.45 billion euros, the utility said.
Hybrid Bonds
The company has said it may sell hybrid bonds to reach its 2 billion-euro target. These securities have been popular with issuers because ratings firms typically count half of the bonds as equity, reducing their assessment of a borrower’s indebtedness.
It’s likely EON will offer around 1.3 billion euros of hybrids to get a 650 million-euro equity credit, John Musk, an analyst at RBC Europe Ltd., said by email.
Designated Chief Financial Officer Marc Spieker said in the company’s statement that the share sale was the first step in raising the cash that’ll be used to “swiftly and decisively reduce our debt.”
The company’s credit rating was downgraded by S&P Global Ratings and Moody’s Corp on Wednesday.
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