M&A Announcement

Oct 8, 2019

Hello, and welcome to the Fortum IR International Media Call. My name is Rosie, and I'll be your coordinator for today's conference. For the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions at the end. I will now hand you over to your host, Ingelaire Ullavez, Head of IR, to begin today's conference. Thank you. Good morning, everyone. Welcome to Fortum's joint Audiocastes news conference this morning related to our announcement of Fortum's acquisition of Uniper Stake. My name is Ingela Ulfes, and I am the Head of IR at Fortum. With me here today are our CEO, Pekka Lundmark and our CFO, Markus Raurama. Pekka will start by giving an overview on today's news, after which we will open up for questions. Please note that this event is being recorded and a replay will be available on our website after the call. With this brief introduction, I now hand over to Pekka. Thank you very much, Ingela, and good morning, ladies and gentlemen. As you have seen, we have this morning announced the agreement to acquire the Uniper Stakes of Elliott and Nightwing. This will decrease our holding in Uniper to more than 70.5%. This is an important step forward to finally breaking the headlock situation at Uniper, which has negatively impacted the company for quite some time now. Before I happily take your questions, I would like to outline briefly why we are increasing our holdings, how this fits into our strategy and give some detail on the transaction and the path forward. We have always said and continue to believe that 2 companies joining forces is beneficial for all stakeholders. Equally, we are determined to take the 2 companies forward jointly with the Uniper management team and employees and create a leader in the European energy transition. As you know, talks between the management teams have been ongoing for more than a year now, and we have to accept that far too little has come out of them. We are certain that this will change now. We are buying the stakes of Elliot and tonight's winke to eliminate any uncertainty that may be there about our long term interest in Uniper and to provide absolute clarity on the ownership structure of Uniper. At the same time, you may wonder why being in such a strong position, we are not implementing a DPLPA or squeeze out for at least 2 years and fully integrating Uniper. Let me reiterate, we want to do this together with Uniper because we strongly believe that constructive interaction renders the best results. For 2 years, we can now work together on the strategic and operational alignment of the 2 companies. In that sense, it is a great opportunity for both Uniper management and the employees to play an important role in shaping the future of the 2 companies. How does this transaction fit into our strategy? As we have consistently said since we first announced our interest in Uniper, Fortum is committed to the energy transition, and we all understand that it will not happen overnight. While we are focused on leading the transition to cleaner energy, we also understand that we have to meet the needs of our customers in terms of security of supply and affordability. And that's where Uniper comes in, because we can't just fast forward to the future. With the plant with planned European coal phase out coupled with Germany's 2022 nuclear stop date, universe gas assets will have an important role to play in providing security of supply for the increasing share of renewables in the system. While Uniper mainly stands for gas and coal in Germany, it has in Sweden and Germany a sizable hydro portfolio that complements the growing share of solar and wind. They also have CO2 free nuclear in the Nordics, which continues to be an important baseload provider and one of our core competencies. Uniper's extensive commodities trading activities are complementary to the power generation business. The commodities business also includes sizable gas storage and long term contract portfolios that play a key role in ensuring security of supply. We expect a good return on our investment, and we believe that we can achieve even more benefits by working together with Uniper. At the same time, we want to continue to be a solid and good dividend payer. Our dividend policy remains intact payout ratio of 50% to 80% of earnings per share with sustainable, stable and over time increasing dividends. As per our announcement, here is a summary overview of the actual transaction. We have signed an agreement with Elliot and Knightwing to acquire in excess of 20.5% in Uniper. We will pay approximately €2,300,000,000 for the 20.5 percent shareholder, corresponding to €29.93 per share. Upon closing, Fortum share in Uniper will increase to at least 70.5 percent and the total investments in Uniper to approximately €6,200,000,000 representing an average price of €23.97 per share. The transaction is subject to regulatory clearance in Russia and in the United States. We have had extensive discussions with the Russian authorities and have made a preparatory filing to the Russian Federal Anti Monopoly Service. We expect that we will close by the end of the Q1 of 2020. And once clearance is obtained, we would consolidate Uniper in our financial statement as a subsidiary. Financing for the transaction is in place. We will finance this purchase with existing cash and underwritten weighted credit facilities available to us. We are committed to maintaining an investment grade rating post transaction and strengthening our financial profile longer term. We also intend to have our ownership position appropriately reflected in the Supervisory Board representation and will now reach out to Uniper to ensure transition process is managed accordingly. Recently, there have been a lot of reports on the concerns of the Uniper employees, which I understand very well and take very seriously. So let me spend a little while on this topic. It's very clear that dedicated and motivated employees at Uniper are key to the success of the company. We are therefore keen to ensure that Uniper employees accept us as a strong and dependable owner who provides stability and opportunities alike. In terms of stability, we have already set up a number of important commitments such as honoring all existing agreements governing employee rights or indeed the existing level of co determination in the supervisory board. We will we also will not cause Uniquity to implement compulsory redundancies as a result of the transaction nor to relocate its corporate seat away from Bussardorf. Very important in that respect is that as we will not implement the so called domination agreement for at least 2 years, there will now be ample time to sit down with the Uniper management and employee representatives to firm up those agreements in terms of content and duration. In terms of opportunity, I'm absolutely convinced that Uniper and Fortis joining forces means the creation of many interesting prospects for the employees of both companies. There is a lot of experience and skill at Uniper, which will be needed when we take on the European Energy Transition together as one of the leaders. Thank you very much, ladies and gentlemen. And now I am happy to take your questions. Back to you, Ingela. Thank you, Pekka, for giving the overview. And we are now ready for the questions and answers. And in addition to Seksa and Markus, we also have our Head of MSA, Mikael Kwawelainen, available for answering questions. Operator, we can now open up for questions from the And the first question comes from the line of Sam Arie from UBS. Please go ahead. Good morning. I think the 2 questions that I wanted to ask is, firstly, obviously, you've made some progress around the restrictions in Russia. But could you talk a little bit more about how that works? Or do you have any signals that you will be able to get above the 50% threshold? Or are you assuming that you will be able to kind of get around that by saying that you're not implementing a domination agreement, so you're a 70% shareholder, but you don't have control? Anyway, that's my first question to understand a bit more your thinking how you can get around that Russian regulatory requirement. Then the second one is if you can just talk to us a little bit about how you think the ratings agencies will look at this on your side and on the Uniti side? Because I think in my last note, I did say that even an increase in shareholding above 50% would lead to a downgrade unless you had remedies alongside. So just wondering what you're thinking is there. Thank you. Okay. Thank you, Sam, for the two excellent questions. I'll take the Russia question and then Markus will take the credit rating question. Over the past few days weeks and actually months, we have had extensive discussions with Russian authorities on this 50% limitation that they imposed on us. And those discussions have led us to believe that there is a solution available to the issue. Of course, I cannot preempt the decision of the authorities. We have to let them do their work. And that's why this transaction and the closing of this transaction is subject to the approval from Russia. But we would not have taken this step unless we would be quite confident that an approval could be obtained. Now as to the details of what the content of that decision would be, that I am not able to speculate more on. Okay. And then with regards to rating agencies, they have been following the steps very closely, and they have published their reports. Now we will discuss the details of this transaction with the agent's fleet. And our key point is that we are committed to an investment grade rating of this transaction. And in the long term, we work to strengthen our financial profile. What is important for us is that we continue, under all circumstances, have good access to affordable priced financing. So we'll take it from there with the agencies now. The discussions will continue with them. Can I just ask a quick follow-up on that, on the rating? Just on the specific question of kind of how they might look at Uniper because I suppose there was a thought that if you have if you are consolidating Uniper from an accounting point of view, they may then take the view that Uniper is anchored to your credit rating, but anchored to your credit rating without the government uplift. I'm just wondering if you've had any signal from them that maybe at 70% without nominations, they wouldn't treat Uniper as a controlled subsidiary? Or is it too early to get into that? Yes. The concern, of course, with regards to rating of both companies that is we will take that into account and that is one of the issues that now needs to be discussed with the agencies and of course with Uniper as well. The next question comes from the line of Lucas Schumacher from Societe Generale. Please go ahead. Tika, you mentioned in your speech that you are certain that the attitude of Unifin's management would change now. If I read your press release, there still seems to be a certain amount of frustration that the I think in your words, the yet discussions have each time ended short of actions. Now you say you expect to be represented on the Supervisory Board without much delay, but realistically, you might have to wait until 2022. So has there been sort of a last minute change on the Uniper management that you can finally expect cooperation? What is making you so optimistic that things could change now from the way they were over the last 2 years? And the second question is again on the credit rating. So you're committed to investment grade rating. I'm taking these quotes also include BBB- would you be happy with that? Or as S and P have mentioned that it's not the credit metrics that are offset by them, but the which actually improves if you fully consolidate unit power, but it is the risk profile, especially in relationship to thermal generation, where an easy remedy would be the closure or disposal of coal fired capacity. Would this be something you would prefer over taking it to a B- or is it still, well, what can see as we go along? Thank you, Wouter. Again, I take the first question, then Markus will comment on credit rating. Of course, I cannot speak for Uniper's management. They have to yes, they have to speak for themselves. But as I have said, we have had very constructive discussions with the new management over the past few months. If you sense signs of frustration in our comments, that simply comes from the fact that this whole thing has been going on for quite a long time and there's very little progress we've been able to announce to the market. And now our hope and belief is that now when we clarify the ownership structure and become an even stronger owner in Uniper, that will clarify things and that will increase everybody's and all parties' motivation now to really sit down and do what at least we would be open now to do with Uniper's management is to really discuss that how the joint vision, joint strategy and its and a joint operational plan would look like. So hopefully, this kind of simplified shareholder structure will help to do that. And then very importantly, the fact that we are now unilaterally offering this 2 year in a way period where we are not going to do a domination agreement or a squeeze out. That would help to stabilize the situation and give us enough time really to sit down with Universe Management and create, without the massive time pressure, a joint plan forward. Okay. And with regards to the credit rating, technically, of course, it would be a minus is also investment grade. But I would say that as we have also previously communicated, what for us is critically important is that we maintain access at all times at that affordable price capital. So now we will discuss with the agencies what are the financial and business risk implications of the planned steps. And what comes to the transaction, of course, we want to make sure that the transaction can be consummated. So we have the cash resources and committed underwritten credit facilities available for this. And then we have good time now to discuss with the agencies how to go forward. The next question comes from the line of Vincent Ayral from JPMorgan. Please go ahead. Hi, good morning. So questions on the Russian approval and free rating have been looked at already in detail. I want to ask a question regarding the remaining MIMI of the shareholders in Uniper. You do not plan to do any squeeze out or the munition agreement for the coming 2 years. But is there any intention to still buy a few shares directly on the market? I think that would be my first question. And are there any restrictions regarding the price, if so? Thank you. Okay. First of all, we have no obligation to do anything on the market. There is no obligation to buy any more shares and there is no obligation to do any new public tender offers. And actually, I can confirm that we have currently no plans to do any new public tender offers. But on the other hand, we have no restrictions as to our ability to operate on the market. And as usual, we do not comment on our further intentions. Time will tell. Of course, important to keep in mind that before we have a clearance decision in Russia, we are not legally allowed to buy any shares or at least not close any new share purchases. Thank you. And I'd like to ask a second question regarding synergies because you flagged potential synergies within the portfolios, obviously, where you have overlapped like in Sweden or in Russia. Basically, do you have any type of question of what can be done regarding that? I assume a better management or optimization of the hydro fleet in Sweden, for example. What would you have in mind for the Russian side? There is several potential sources synergies and the example that you mentioned is obviously one of them, but there are many, many, many others as well. We are not ready at this time to give any monetary estimate on the value of those synergies. This is really going to be part of the strategic and operational planning that we now want to do together with Uniper's management. And once we are through that step, then in due time, hopefully, there would be a possibility to also give an estimate on the value of synergies. But we are not there yet. Thank you very much. And I'll finish with the last one. If indeed you need to discuss with Uniper management and also provide these quantifications. When can we reasonably expect this to happen if everything goes as planned? Thank you. I'm sorry, but that's also premature to say because this is such a fresh announcement. And now once again, we need to sit down with Uniper's management and make a plan, including what you just asked, but we estimate that how long it will take before something can be informed to the market. The next question comes from the line of James Barrow from BNP Paribas. Please go ahead. Yes, good morning. Sorry to go back to the credit rating actually, but I just wondered if you could be clear. It appears you haven't actually discussed the transaction in detail with the agencies, and it's already been flagged in the call that the issue one of the key variables will be the issue of the business risk. And so just could you be very clear that, say, if S and P is seeing the business risk deteriorating significantly, you would be willing to take active measures to support investment grade rating rather than perhaps just focusing on funding costs? And then secondly, just curious if you could sort of elaborate on how you view this transaction. You obviously will increase your sort of consolidated carbon footprint at a time when you're trying to do that transition to cleaner energy. So just curious to think how you view that and also how your majority shareholders view the fact that effectively you're increasing your carbon footprint? Thank you. Okay. If I take the second part of the question and then Markus will continue the credit rating and its implications. Obviously, the carbon footprint is an important consideration. We continue to be of the opinion that Europe and the world needs to reduce emissions fast. When you just technically calculate that what the combined Fortum's and Uniper's generation of the generation volume, what the share of coal and lignite would be of the total output in 2018. Kohl and lignite and the total generation output of the combined portfolio would have been 18%, 1.8%. And then obviously, subject to then the plans that will be confirmed regarding coal phase out with the national authorities, we would then expect that share to shrink over time. Okay. And with regards to the credit rating question, the agencies have been flagging various scenarios based on their own assessment of the situation. So the question would we take measures or what measures would we take? Again, our objective is to have a solid investment grade rating. And what gives us is not only cost of capital, it takes us capital at all times and at an affordable cost. So now we will discuss the agency's views and what has been announced and how they look at the situation. And then we'll continue from there to see what the possible outcomes are. But I wouldn't prefer that at this point. Okay. And maybe just one follow-up. Is kind of one of the reasons kind of the 2 year time frame before you kind of take this out the minority, is that again partly to sort of give you help build up a bit more financial headroom when you go eventually to 100 percent? No, that is not really the driving reason behind that. The way we see these 2 years is really the time to calm down the situation to allow for ample time for the 2 management teams and the employee representatives now really to sit down and create a joint vision strategy and operational plan. Obviously, while we are doing that, the credit rating implications will be an important aspect that we will have to consider. But it is not kind of the main driving thing there for the 2 year decision. Okay, understood. Thanks. The next question comes from the line of Peter Peszka from Bank of America Merrill Lynch. A few questions from me, please. So firstly, regarding supervisory board representation at Uniper. Can you clarify, are you legally entitled to more Board representation? Or do you actually need the corporation of Uniper? And how many additional Board seats are you looking for? And how quickly do you expect to gain those? So I guess that's my first question. The second question is the Russian approval that you seem to be very confident in gaining. Does that actually require any cooperation from Uniper to achieve that Russian approval? That's my second question. And then the third one, just activist domination in the sort of 2 year plan. I'm not sure I fully understand why you can just put in a domination agreement now to take control of the company. And then there wouldn't be any issues of whether Uniper can operate or not. So I'm just wondering what the downside of that approach would be. Okay. Thank you. First, the Supervisory Board question. As we said also in the release, we now want to sit down with Juniper and see that what is the best way of implementing our representation of the Supervisory Board. If we just look strictly legally, Supervisory Board decisions for those members whose terms are ending are single majority decisions at AGM, Forcing changes for supervisory board requires qualified majority at shareholders meeting. We do believe that for all practical purposes, this transaction will take us pretty close or even achieving that qualified majority. But that's kind of not the main thing we are thinking about right now. We really want to discuss this with the company and hopefully find a solution that both parties can live with. And the Russia decision, I mean, this will really depend on the exact content of the decision of the authorities in Russia, and I do not want to speculate on what exactly that would include. I just repeat what I said earlier that the discussions we have had with the authorities have given us quite high confidence that there is a way to solve the issue. But more details than that, I'm not able to provide at this time. Once again, there's no elimination for 2 years. This is really kind of a sign from our point of view that we do want to create this plan together with the company. And this 2 year time is now really a good period where we can do that together with them. We do not want to dominate yet and we do not want to speculate what will happen after this period. That is the plan that we want to that is the plan that we want to create together with the company. That's what's behind the 2 year decision. So sorry, is the concern that if you were to launch a domination agreement today that somehow this would demoralize the Uniper management and employees and would prevent you despite having full control of the company, prevent you from being able to manage it and run it as you would like? Is that the issue? It's a very high priority for us to really to now finally create a good and trustful relationship with all stakeholders. As I said earlier, we have had really good discussions with the new management of Uniper. Progress has been fairly slow. Hopefully, this step will enable faster progress. And then there has been a lot of concerns by Uniper employees and the employee representatives, which they have many of those concerns they have also shared in public. It's very, very important that we now create a trustful relationship with the employee representatives as well because I genuinely believe that this prospect of creating a leader in European Energy Transition together is something that is a fantastic prospect for the employees of both companies. And now hopefully, this sign of goodwill actually that we are giving through of 2 agreements. No domination agreement for 2 years is something that also the company and its employee representatives will take and accept that now they will sit down with us and create a good plan together. Okay. Thank you. The next question comes from the line of Daniel Vaughan from JPMorgan. Please go ahead. I think most of my questions regarding the credit rating have been asked. I think one point I would make is that almost regardless of what you do to your financial risk policy, so whether that's asset disposals, etcetera, I don't think you can get around business risk profile deterioration. Therefore, I think to commit so solidly to a solid investment grade rating is slightly premature. But I think all of my questions have been answered. Thank you. Your next question comes from the line of Achim Mammadov from Bloomberg. Please go ahead. I had some questions, if I can comment on paperphone. I mean, I know it's early days, but can you give us a feel of what it would look like at the emerging companies today and finalize the deals with the UK and earlier? My second question is on U. S. Approval. Can you I mean, we've talked a lot about the Russian ones, but can you give us a bit of a color of what it is, what are the steps and what to look out for? Okay. I'll take the U. S. Approval question and Markus will take the other one. I mean, we see this U. S. Filing as a mere technicality because, I mean, the law there says that when you cross a certain threshold, you have to file for a permission and 50% is a threshold there. And obviously, Uniper has important activities in the United States. At the same time, Forti, there's no activities in the United States. So that's why we do not expect any problem. But for technical reasons, you have to file. Okay. With regards to any combined KPIs, we are not commenting on those at the moment. Indeed, in the release, we are presenting combined key financials for illustrative purposes. Of course, we understand that the FFO net debt is a very important measure, and these are the initiatives that we will work with the company and the rating agencies. I'll come back to this later. The next question comes from the line of Hakan Drusch from Macquarie. Please go ahead. Thank you. I just had a question about Uniper's dividend policy and your attitude towards that over the next couple of years. Obviously, UK has a fairly high cash payout policy already and with UK capacity payments coming through potentially and then maybe compensation for some of the hard coal units that may be taken off in Germany. It could be that part of €2,000,000,000 that could, in theory, be swept out of Uniper. Would you like to see as much cash through to you as possible? Or despite the minority leakage, or would you rather Uniper be more cautious and keep cash on its balance sheet given slightly higher risk business risk profile? Now I would like to refer to this commitment of not doing a domination agreement for 2 years, which means that Uniper will continue as an independent listed entity. And it means that it is for Uniper to propose the dividend to the AGM and then for the AGM to vote on such proposals. And we will not speculate on what management may propose in the future and how they may vote in regards to such dividend proposals. Of course, so far, we have been quite supportive of Uniper's dividend proposals and dividend policy. But now it's really up to management to propose going forward. Okay. In terms of the metrics that you're focused on in discussing with the rating agencies, do you believe that the dividend payouts for Uniper will be helpful or detrimental? That would be premature to comment. So there are many moving parts that we will be discussing with the agencies in the coming weeks months. The next question comes from the line of James Brand from Deutsche Bank. Good morning. I have three questions, please. The first is just on, again, sorry, the balance sheet. I appreciate that you don't want to give any kind of clear indication until you've had discussions with the rating agencies. But you must also have your own views independent of whatever judgment the rating agencies come out with as to whether or not your balance sheet is reasonably leveraged this transaction. So I was just wondering whether you were comfortable with your overall level of leverage post deal, whether you felt that you have to take action to delever? The second question is on the carbon footprint of new company. And you spoke a bit about the role of coal in the mix and the coal closures. And also in the past, you've talked about the benefits that you felt you could bring to Uniper in terms of helping it decarbonize and helping take action to reduce its carbon intensity. And you had a lot of time to think about that. So I was just wondering whether you had any views you could articulate now as to action that you would take that maybe isn't in Uniper's existing plans or ideas that you have or ways you could help it decolonize? And then thirdly, just on the synergies. I just want to clarify whether you felt like there were any synergistic benefits of moving to a majority stake in Chupa? Obviously, you wouldn't be able to crystallize traditional synergies unless you acquired the rest of the shareholding. So are there any synergies that you felt you might be able to capture over the next 2 years? Yes. Okay. So I will start with the balance sheet question. So first of all, at the moment, if you look at our financial targets, we are currently over our long term target of leverage. So directionally, what we're saying is that we are committed to the investment grade rating, which we believe is feasible and that we will strengthen our financial profile in the long term. Having said that, again, the transaction is fully financed. We, of course, we have the underwritten facilities in place. So we have no issue with the financial ability, and we are comfortable with risk levels in our balance sheet at the moment. We don't have an issue with that. When it comes to the carbon footprint, there's a lot we can do together. And if I just mentioned one example from the technology side, obviously, when the coal phase outs proceed and when Germany shuts down nuclear, as we all know, the importance of gas grow tremendously. And what we feel is a really exciting prospect is to use that gas position, including the infrastructure and storage as a platform for decarbonization through technologies like Power 3x, electrolysis, hydrogen, mixing hydrogen into natural gas, potentially methanization and so on and all the applications of this in different types of industrial uses, which will be very, very important for the European decarbonization. So there is one concrete example, but of course, there's a lot more. We really appreciate Uniper's position in gas and also in this new power to gas technologies. And we have a lot of initiatives going on also in new technologies. And this, I believe, will be very exciting cooperation area under the umbrella of decarbonization. The majority position, of course, hopefully, as I have explained, speeds up things. We have had good discussions with management. We had already started the evaluation of several different corporation streams several months ago, but progress has been very slow. And hopefully, this simplified and streamlined ownership structure will now help us as a means and a catalyst to speeding up the corporation projects and that way joint value creation and achieving synergies. So it's not an automatic step itself, but we hope that it will help to speed up and clarify things so that we can proceed faster. Okay. Thanks a lot. The next question comes from the line of Jacob Magnusson from Panter Bank. Please go ahead. Thank you. Two questions from my side. I'm just wondering, in the long term, are you still hanging out to your net debt to EBITDA ratio of around 2.5%, as you said in your latest presentation before this announcement. And coming back to reducing leverage in the longer term, what exactly is longer term? Are we talking years or? That's my first question. And the second question is just a technical one. Is it correctly understood that you could get 70% of the votes in the Supervisory Board in spite of this 2 year non domination agreement? And how would that work if you have 70% of the votes that are not able to dominate? Just explain that. Can I take the supervisory bond and then Markus will comment the leverage question? Supervisory Board has 12 members and 6 out of them are employee representatives and those seats or those seats or this transaction has nothing to do with those seats. So what we are talking about is the 6 shareholder representatives. And that's where we are saying that we will we now expect to be adequately represented so that representation would correspond to our shareholding. What this detailed term means is something that we want to discuss with the company and then inform in due course. There is no automatic connection from this to the absence of domination agreement for 2 years, these are actually 2 separate issues. Yes. And then with regards to the net activity target, for the time being, that is an absolutely valid target. Now, of course, we will evaluate that and come back then at closing. We will discuss with the rating agencies again, look at what are the right KPIs, what are the right levels for the targets. And again, the target for us that we continue under all circumstances have good access to affordably priced capital at all times. That is what is driving our thinking. And then what is the long term, then we look over the cycles. Of course, we look at what are the risks and cyclicality in our businesses. And we know that there is a lot of volatility in our respective markets. So we have to take that into account when we evaluate short term and long term. All right. Thank you very much. The next question comes from the line of Adrian Foucaud from Deutsche Bank. Please go ahead. Yes. Thank you. I just had a quick question on leverage. More precisely, I wanted to know if you intend to issue hybrid bonds to refinance part of the acquisition debt? We don't have plans to do that. No. Okay. Thank you. The next question comes from the line of Sofia Sawantaview from Exane. Please go ahead. Yes, good morning. Thanks for taking my questions. A couple for me as well. So first of all, coming back to the could that be subject to you or Uniper assets in Russia? And what would be your view on that? So would you be willing to accept to sell assets in Russia in order to be able to increase your stake to Tunica to 70%? The second thing is when you were doing your consolidation of coal in the mix, obviously, that excludes Daterne and Berzofkayia to big comp plans that are going to come online next year. Are your is your position that these two plans should come online, especially speaking on Deltown, which is a point of discussion right now between Uniper and the German authorities? And one small numbers question, might be a bit early, but just on your fair value adjustments that you had disclosed on the Uniper 50% stake, you had said it's a €30,000,000 write up for 20 years. That's what you had said, I think, at your Q2 results. Just wondering whether you have any update on how that will be impacted from this transaction. Sort of on my numbers, that has come down to sort of €10,000,000 but any guidance you have on that would be helpful. Thank you. Thank you, Sofia. First, on Russia, we do not want to preempt what the content of the decision of the Russian authorities would be. But what I can say though is that as we have said before also, we believe that the reason originally for this 50% limitation was of a fairly technical nature, totally irrelevant in terms of size and significance compared to the overall size of the business. And we have always believed that there are fairly straightforward solutions to that question, much more straightforward than any major asset disposals or anything like that. Having said all this, we cannot preempt the content of the authority decision. Then when it comes to Berechovsky and DAT10 4, these are operational questions that must be handled and commented by Uniper management. On a general level though, I have to say that I have a lot of sympathy for Uniper's management's argumentation regarding that and for that when it now seems to be the case that Germany is setting down a coal face down schedule where they create a plan for each year as to how much coal capacity would be online. So isn't it in everybody's interest that at any given time when the total capacity is set within that capacity, we would let the most environmental friendly and efficient plants run and shut down the older and much more polluted plants. This is a comment on a general level, but then what this means in practice for the various plants, that is something that Uniper management will have to comment. And then Markus takes this last question. Yes. Okay. So with regards to the accounting treatment, so until after closing, we continue to consolidate our investment as an associated company and then after closing as a subsidiary. Thereafter, we'll have 12 months to do the purchase price allocation for the next step. And we will come back to this issue at closing and then comment more on if there are any changes to the previous treatment of the PPA from this first step. But we'll come back at that point. The next question comes from the line of Vincent Ayral from JPMorgan. Please go ahead. Hi. Thank you for taking another question here. If just to get the rationale for the 2 years of no domination or squeeze out, Are there legal implications if you were to do the emission agreement, could you tell you also funding basically come back to your last 4 hour price? And could you explain us the legal situation there and then the rationale for you maybe to take a 2 year break on this specific issue? Thank you. When it comes to the rationale, I think I already explained in a fairly detailed manner for us. For us, the rationale is really now to create a window that is at least 2 years within which time we will be able to then create a joint vision strategy and operational plan with Uniper and with the employee representatives. Then when it comes to any additional legal aspects, there's nothing more that we can comment. We have a published all the information about this that we are going to publish. The next question comes from the line of Katie Kwankolo from Bloomberg News. Please go ahead. Hi, this is Katri Pohenpala from Bloomberg News. I'm a reporter. I just had a brief question. Could you explain how you came to agree to buy about 20% stake from Elliot and Knight Lincoln? Because according to public filings, they with their units, recently held more than 30% of shares in Uniper. But that over 30% number I do not recognize. What you may refer to is the fact that the that the Elliott had disclosed that they would hold shares and instruments at 17.84%. And my Vinkes holding announcement is 5.6%. So we are buying everything that MyLink has. We are buying at least 15% from Elliott. And then why is there then the statement that we buy at least 15%? That has to do with the fact that some of these are not in shares. They are in various types of instruments that Helios is holding. And it will not be 100% clear before closing of the transaction that how much of those actually they will be able to deliver. So this explains this. That's why we are saying that we are buying at least 20.5%. But the 30% that you mentioned, that number I do not recognize. If I may follow-up. It was the Cornwall GmbH that held about 7.8% as of, I think, May 31 is the latest filing that I can see, Cornwall is controlled by Elliott. So I'm sort of wondering whether you would like to buy more from Elliott or how you came to agree to buy the specific amount that you're buying? Our understanding is that we are buying everything that is controlled by Elliott. And actually, as part of this agreement, Elliott both Elliott and I think they have confirmed to us that after closing, they will not hold any shares or instruments in Uniper. Thanks so much. We have no further questions coming through. So I'll now hand the call back to Ingrao for any closing remarks. Thank you so much. Thank you, everyone, for your active participation here today. And on behalf of Fortum, we wish you all a very nice rest of the day. Thank you. Thank you. Thank you. Thank you. Thank you for joining today's conference. You may now disconnect your lines.