Good afternoon, everyone, and welcome to Fortum's webcasted news conference on the stabilization package that was agreed for Fortum's subsidiary Uniper. My name is Ingela Ulfves, and I'm the head of IR at Fortum. This event is being recorded and a replay will be available on our website later today. With me here in the studio is Fortum's CEO, Markus Rauramo, while our CFO, Bernhard Günther, is participating with us online. The agenda for this event is the following. We have reserved a total of one and a half hours for this call that we will then split between the international and domestic audience. Markus starts by presenting the key elements of the stabilization package as well as the next steps. After that, we will open up for questions for the international investor community through the teleconference. Please note the dial-in instructions in our today's release.
After the Q&A session, we thank the international audience, so we then switch to Finnish, and we'll take questions from the Finnish media. With this, I now hand over to Markus to start.
Okay. Thank you very much, Ingela, and thank you to everyone on this webcast for joining us this afternoon on such short notice. As you all know, we are currently living through an unprecedented geopolitical crisis. Our subsidiary, Uniper, has been particularly hard hit by the curtailments of Russian gas since mid-June and has been under extreme financial pressure due to this. Since Uniper's gas trading activities are critical for the energy supply of both Germany and Europe, it was of utmost importance to swiftly find a solution to stabilize Uniper financially and to protect European energy supply. After intense but constructive negotiations in a very short time period, I'm very pleased that together with Uniper and the German government, we have now agreed on a comprehensive package to provide financial relief to Uniper. The terms we have agreed on immediately address Uniper's loss-making and substantial liquidity needs.
The agreement also initiates measures to de-risk Uniper's gas business model and to secure Uniper's credit rating to support the path to longer term viability. For us at Fortum, it was also important that the solution will not require additional capital from Fortum nor the Finnish taxpayers, and this is reflected in our agreement. Through this arrangement, Fortum remains Uniper's majority shareholder. Throughout this process, all parties involved have lived up to their responsibilities to find the best possible solution to safeguard Europe's energy security. I would therefore like to sincerely thank the German government and our colleagues at Uniper, as well as the Finnish government for their support and hard work in the recent weeks. Now, before I talk about the key elements of the package, let's take a moment to remember how and why Uniper suddenly found itself in this emergency through no fault of its own.
The current challenging situation is caused by the unprecedented Russian attack against Ukraine. Before the war, Uniper and Fortum successfully delivered on our joint strategy. In 2021, the Fortum Group achieved its most profitable year on record, with Uniper contributing half of the group's comparable operating profit. As Fortum Group, we were therefore together well-prepared for normal market risks and volatility. However, the Russian war against Ukraine and the Russian government's decision to use energy as a weapon has upended energy markets across Europe. As one of the largest importers of Russian natural gas in Europe, Uniper has been most affected by this geopolitical crisis. You can see on the slide that the majority part of Uniper's long-term gas supply contracts originate from Russia. Since mid-June, Uniper has received only a fraction of its contracted gas volumes from Gazprom.
Gas volumes fell by approximately 60% when the curtailment started, and during the past 10 days, as the Nord Stream 1 pipeline has been under its annual maintenance, no volumes have flowed through. To meet its obligations towards customers and to safeguard European security of supply, Uniper was therefore required to procure the missing gas volumes at a significantly higher spot market price. This meant that it had to shoulder the financial losses due to the higher cost from the gas curtailments without the possibility to pass on higher costs to customers. This has had severe consequences for Uniper's liquidity, earnings, and capital. It was therefore of utmost importance to stabilize Uniper, to put an end to this significant loss-making and cash bleeding as a result of the Russian gas curtailments. The concluded stabilization measures immediately address Uniper's loss-making and substantial liquidity needs.
At the same time, it initiates measures to de-risk its gas business model and secure a credit rating to support a path to longer term viability. I now want to briefly summarize the key elements of the stabilization package. As part of the equity and liquidity measures, the German state will take a 30% equity stake in Uniper. It will do so by subscribing approximately 157 million new ordinary registered shares at nominal value of EUR 1.70 per share against a cash consideration of approximately EUR 267 million. The German government has also committed to make available further capital of up to EUR 7.7 billion against mandatory convertible instruments to address potential losses as and if they are needed.
To further support Uniper's liquidity needs, the German state-owned KfW Bank will provide Uniper with an additional EUR 7 billion in liquidity support by increasing its existing credit facility from the current EUR 2 billion to EUR 9 billion. In addition, the German government informs that they intend to introduce a cost absorption mechanism that covers 90% of the losses that result from higher costs for gas replacement volumes. The government will introduce this mechanism from 1st of October. It has also been agreed that the German government stands ready to provide further support if Uniper's accumulated net operating losses due to continuing gas curtailments exceed a total aggregate amount of EUR 7 billion. If it is required, this support is intended to be implemented in a manner that avoids further economic dilution of Uniper's shareholders.
It is clear that while these measures now ensure Uniper's immediate stabilization, it will require further efforts to turn around, particularly Uniper's gas business. The German government will work on this together with Uniper and Fortum. The measures agreed will help Uniper, and consequently also the Fortum Group, to return to a stable footing. As Uniper's majority shareholder, we acted to share the burden with the German government knowing that Uniper's rescue was urgently needed and is in the interest of Fortum and the Finnish state. I have already mentioned Fortum and the Finnish state do not have to contribute any new money, but will indirectly incur losses due to the dilution of our stake, just like any other shareholder of Uniper. As a consequence of the agreed equity and liquidity measures, Fortum's current 80% stake in Uniper will be diluted to 56% on the initial equity injection.
Fortum will remain Uniper's majority shareholder and will continue to consolidate Uniper as a subsidiary. In consideration of its liquidity support, Fortum will also have the option to convert its existing loan of EUR 4 billion against a portion of maximum 70% of the mandatory convertible instruments subscribed by the German state. Fortum will thus be in a position to retain its stake in Uniper above 50% and to participate in the stabilization measure at the same terms as Germany. Furthermore, Fortum's guarantee of EUR 4 billion will remain in place during the stabilization. In the sequence of repayment, the KfW loans rank senior to Fortum's loan. The stabilization package is subject to several conditions.
As part of the package, it was agreed that Uniper would waive future dividend payments and restrict the variable compensation of the members of Uniper's board of management for the time period when the stabilization measures are in place. In addition, the German state, as a new shareholder, will have adequate representation on Uniper's supervisory board. The stabilization package also requires all applicable regulatory approvals, in particular by the European Commission. The stabilization measures are also subject to confirmation of the investment grade rating of Uniper by Standard & Poor's Global Ratings, as well as approval by a Uniper extraordinary general meeting. As a part of the package, it was also agreed that Uniper will withdraw its lawsuit against the Netherlands under the Energy Charter Treaty. Looking at the way forward and next steps, here are more detailed but indicative timeline over the process going forward.
We expect that the process to take between one to four months. Uniper will come back to a more detailed timeline later on. Before we move to the Q&A very shortly, I want to reiterate that I'm very pleased that we were able to reach this agreement together with Uniper and the German government, as well as the support of the Finnish government. The solution we reached not only provides stability for Uniper, but also for European security of energy supply. During this challenging time of war, the agreement also demonstrates the unity of the European Union and our willingness to protect our common values. I'm convinced that following the engagement of the German state and a stabilization of the European energy markets, Uniper will retain its crucial role in the European energy transition. I will now welcome your questions with Bernhard. Over to you, Ingela.
Thank you, Markus, for your presentation. With this, we are then ready to start the Q&A session and take your questions. I would ask you to limit yourself to one question each, and then we see if we have time, so you can come back with more questions. Moderator, please, begin the Q&A session.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Wanda Serwinowska from Credit Suisse. Please go ahead.
Good afternoon. Wanda Serwinowska, Credit Suisse. One longer question on the absorption mechanism the German government wants to introduce. From what I understand, it doesn't cover the past losses and the losses that Uniper can incur by the end of September. Can you please confirm it? If... Could you also quantify the losses incurred by Uniper year to date? Lastly, if you could confirm if the mechanism covers volumes sold outside Germany. I mean, it's pretty substantial. Thanks a lot.
The support of the EUR 7.7 billion convertible, that's meant to cover all of the net losses caused by the gas curtailments. In case of losses, then this convertible will be used to absorb those losses. The details of the mechanism are yet to be defined by the German government, but these commitments by the German government, they basically put the framework around how the losses are calculated and what is being included in that. Uniper will accumulate the losses until the first of October. After that, the 90% cost cover kicks in, but all the gas curtailment related losses will be covered then by the convertible.
Bernhard, is there something you want to add?
Yeah, maybe just one or two details. If I understood your question correctly, if in a very extreme scenario of significantly higher curtailments and/or higher spot gas prices, the backstop of maximum losses of EUR 7 billion would be exceeded before the 1st of October. This nonetheless would kick in. Yeah, only the cost recovery mechanism as such will start on the first of October. This will be taken so the backstop is irrespective of the setting on the timeline of the cost recovery mechanism. To your question around foreign business, these aspects have been taken into consideration when the financial modeling for this rescue package was done.
For the losses accrued so far, then Uniper should comment on that.
Brilliant. Thanks a lot.
Thank you, Wanda.
The next question comes from Iiris Theman from Carnegie. Please go ahead.
Good afternoon. What are the implications on Fortum's capital position and rating from writing down the Uniper stake to current market value, given that this would cut the net equity position of Q1 by about 50%?
We will evaluate with the Q2 closing-
If there are any changes to our equity position. We need to come back to that. Of course, one can calculate what has been the acquisition cost of our stake and what is the current market price of Uniper share. That gives some estimation. But too early to say. That would be a Q2 issue. Again, I refer to Bernhard, who may want to comment on the accounting part.
Maybe just not much to comment on the accounting part, but maybe on the rating dimension, Iris, you had in your question. Here I think it's good to keep in mind that rating agencies, they mostly look at earnings or cash flow versus net debt in their rating KPIs and not so much to book value of equity. Therefore, a direct impact or direct connection between a potential impairment on a book value and rating is not necessarily given. Of course, we will see the effect of the ongoing losses that Uniper has incurred since the fourteenth of June, also in Fortum's consolidated Q2 numbers.
Okay. Are there any implications on the capital need from other elements of the plan?
Well, actually, what Germany is doing is injecting about EUR 17 billion of debt and equity capital. Increasing the KfW loan from EUR 2 billion-EUR 9 billion and then the EUR 7.7 billion convertibles. I would say that we get the massive capital injection where, of course, the EUR 7.7 billion, that will be used if and when needed. Only if losses occur, then Uniper would draw on the mandatory convertible, which then gets converted at the end of the conversion period to equity, unless it's then repaid before that.
One of the boundary conditions for the solution was that Fortum would not put in fresh capital, but we do take the dilution impact from the equity injection by Germany. But overall, this is a very stabilizing package and there's a good amount of capital now available both to cover the losses and then for the liquidity needs that have been high and could be high when this turbulence on the European energy market continues. I think this is also part of the very important backdrop for the whole situation. We are now, we have been hit by the impacts of the Russian war in Ukraine.
Europe is in the middle of a energy crisis, and we have to be prepared that this will not be over soon. Now I think we're getting the types of access to liquidity and capital that may be required to weather this storm. This really stabilizes, well, Uniper's and the whole Fortum Group's position. Germany took a huge step in actually absorbing losses, the 90% loss cover and this huge amount of capital and liquidity that Germany is ready to provide. As we call it, stabilization of Uniper.
Thank you.
The next question comes from Pasi Väisänen from Nordea. Please go ahead.
Great. Thanks. This is Pasi Väisänen from Nordea. Just to confirm, if Uniper's losses are roughly EUR 20 billion a year and 10% from that is EUR 2 billion, and Fortum's share is then about roughly EUR 1 billion a year. Is this calculation principle or formula about right? And are you still confident about your dividend payment, roughly EUR 1 billion a year going forward? Thanks.
Okay. We can all make different kind of loss calculations with different scenarios of gas curtailment and gas prices. We of course know what the prices were until today, but we wouldn't know. We don't know. We don't have the visibility into what they will be next week and in the coming months. What this solution provides us is the visibility that up to EUR 7.7 billion, there is a convertible instrument of equity nature, which will cover losses. If the losses exceed EUR 7 billion, then Germany is committed to further support of non-dilutive nature vis-à-vis Fortum shareholders. Basically that puts a backstop already at the EUR 7 billion level where further measures would be taken.
We can all make calculations whether the gas price is X, Y, or Z, and what are the curtailment volumes. This all determines. At the same time, you have seen Uniper's earlier announcements of how it is addressing the situation, working with its customers, working with storage, working with injections. Uniper is pulling all levers to manage the situation, at the same time manage its own situation, but help its customers to deal with the situation. At Q2, we will then analyze the impacts to our numbers, and we will see where we are then. Of course, in the coming months, we will see how the situation develops.
Our dividend policy remains the same, but this is a premature time to make any conclusions of what our board of directors would be proposing next spring with regards to 2022 dividend. This is then something we will come back in due course.
Yeah. Great. Thanks. I hear you.
Thank you, Pasi.
The next question comes from Artem Beletski from SEB. Please go ahead.
Yeah. Yes, hi. This is Artem from SEB. I would like to ask a couple of questions relating to basically this convertible and increased loan from, or credit facility relating to KfW. Could you maybe talk about interest on these facilities and maybe what comes to convertible? What is the maturity there and also conversion terms, so to speak?
I think these are something where Bernhard can give you color on these two items.
Yeah. These. Well, the interest rates will be market going. Yeah. This is the numbers are not published, but it will be benchmarked to market both for the convertible and for the KfW support as it has been already in the past for the original EUR 2 billion of KfW line. There was a- w as there a second element to your question? I couldn't.
Interest-
Understand
maturity.
Well, the KfW line will be there, that's the language, as long as needed. Of course, it ranks super senior as has been mentioned. It has to be paid back first, ahead of any other instruments. That is only utilized to the extent that any capital or liquidity needs of Uniper cannot be satisfied by other instruments. On the convertible, that's for as long as this stabilization period will last.
Maybe just a follow-up relating to convertible. Could you talk about sort of convertible terms when this loan could be converted into Uniper equity?
Yeah. Well, it can be converted at the end of the stabilization period only. Yeah. It's not an option that can be exercised anytime, but only at the very end. It's the logic of conversion that for the first up to EUR 4 billion of the EUR 7.7 billion convertible, there's a 25% discount to the then prevailing relevant VWAP of the Uniper share under the then prevailing EU standards and between EUR 4 billion and EUR 7.7 billion, this will linearly go up from 25%-50% discount.
Okay. This is very clear. Maybe just like sort of theoretical question relating to Fortum. Just like thinking about your equity situation and of course your monitoring situation, and we'll come back to it in accordance with Q2 results. Maybe just thinking of a scenario where your equity could turn negative. Do you think that it would be triggering, for example, equity injection or could you basically live with it given the fact that as I understand on your loans right now, you don't have any covenants and so on, and still distributable assets when it comes to parent company?
I think one, you know, without gun jumping anything on the Q2, I think it's good just to look at what have been the original investments in equity, in shareholder loan, in guarantee, and where is then Uniper share price. What is the implied value for the Fortum stake in Uniper and so on. I think you can, from that, you can kind of come to some kind of a rough estimate what potentially implications could be. Good to remember still that also through our ownership structure, everything that happens in group companies does not immediately flow through to Fortum Oyj numbers. It's when we talk about dividend paying capability, it is the Fortum Oyj Finnish GAAP numbers that then determine kind of certain hard lines.
Overall, of course, we look at the group numbers and the totality vis-à-vis our long-term earnings capability and balance sheet investment capacity and dividend paying capacity. Just as before, we balance these items for the long term when we think about these three corners of a triangle.
Okay. This is very clear. Thank you.
The next question comes from James from Brand. Please go ahead.
Hi. I just want to clarify something. You've got the liquidity facility, which has gone up EUR 7 billion. You've got the mandatory convertible instruments of EUR 7 billion, slightly over EUR 7 billion. Are they separate or are they linked? If you draw on the credit facility, does that ultimately later turn into the convertible or you can draw on the liquidity facility and the convertible? If it's the latter and they're both options for raising cash, what determines whether you draw on the liquidity facility or the convertible? Is the convertible linked to explicit losses and the credit facility is linked to trading, or it works differently from that? It'd be useful to just clarify those two points just explicitly in terms of how the mechanism works.
Your ability, kind of second question, or maybe it's the third question. The second question is, your ability to convert part of your EUR 4 billion loan into equity to avoid further dilution. Obviously, I presume that decision will be made at the time of having to make it. Do you have any kind of initial preference on whether you would like to avoid further dilution, or not? Thank you.
Good question, and it is like you described, the letter, your letter version. The origin of the liquidity facility is that, with this volatile and increasing power prices, we have had to post higher margins. What we did in the autumn and what we did during the turn of the year, we set up the EUR 8 billion Fortum facilities and EUR 2 billion KfW facilities. This liquidity, the key driver for it is that we may.
We don't know how this war and this energy crisis will go. Now when we put together a package to stabilize, we need visibility that for the volatile and potentially very high liquidity needs, we want to have a stable footing where we know that there is enough liquidity for margining and working capital and other purposes. That's the idea there. For the convertible, its purpose is to address the gas curtailment related losses. It will be used if needed to cover the losses. It has the mandatory element of it. It gets converted at the end of the conversion period if it's not repaid.
Of course, if everything goes well, and of course, we all hope that we would need as little of the convertible as possible, and there would be as little losses as possible. We're doing everything to manage the situation, but this is also. Let's say that we have seen how big the curtailments can be and how high the gas prices can be, meaning that the delta between the procurement cost that we have to do and between the contract sales price, at the moment, it can be very large. Now we prepare for scenarios that we do not want to see, but we don't know if we will see. These are the two sides of that coin.
The ability to convert our EUR 4 billion shareholder loan at the terms as described by Bernhard at the time of the maturity of the convertible. It's our choice to use that conversion or not. That gives us the possibility with the terms agreed now. It gives us a possibility to retain our stake over 50%, but it also the terms ensure that the German government doesn't go under 30%. These are the conditions and the logic how it has been set up.
We haven't predefined what we would be doing, but at the terms that it is set, for us, it's a valuable option to have, and it gives us also strategic optionality going forward.
Thank you.
Thank you.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad. Please state your name and company. Please go ahead.
P-
Your line.
Hi.
is now unmuted.
Hi. It's Peter Tertzakian from ARC Financial Corp. Please, thank you for taking the question. I wanted to understand about the right of maintaining a majority ownership and the connected to the right of converting the EUR 4 billion loan. Is there something about providing the loan and the guarantee that needs Fortum to consolidate Uniper to avoid a different accounting treatment, or are there some implications for, you know, Fortum's equity position because of maintaining a majority position? Then related to that, I'm assuming that the Uniper losses will be considerable in the quarter. I'm wondering, you know, at what point this stabilization period would be requiring some form of conversion of equity out of this convertible or other means to manage the gap up until October 1st.
Okay. These are basically this is a right to us, but this is not something that that we have thought of being accounting driven, but it's rather for us, a strategic possibility to maintain, if we so choose, the majority. For the conversion, the conversion would happen at the maturity of the convertible instrument. Again, just recapping. Uniper would draw on the convertible if and as losses would occur. It would likely this would happen in tranches. Once we get to the maturity of the conversion period, the German government either converts the instrument into equity, and then before that, Fortum has the possibility to take part of that.
The idea with the mandatory convertible is that, again, it gives optionality to Uniper and Fortum Group. It can be paid back before it matures, or then we know that if not, then it will convert into equity. From a rating point of view, this is an instrument which target is to then have equity treatment. This protects Uniper from the losses, basically insulates Uniper's and stabilizes Uniper's situation from the potential losses that would continue to be incurred.
By staying in the majority position, that means that the EUR 4 billion loan and EUR 4 billion guarantee can be continued to be considered as consolidated, not marked to any kind of market, or are they also subject to some form of test because of the loss of seniority?
That's not been a driving consideration in our thinking here. Like I said, we are taking part in the burden-sharing. I mean, German government has come in massively with the massive liquidity and equity support. Fortum is carrying its responsibility for the European security of supply by taking a dilutive impact from the German government coming in, but also maintaining our shareholder loan as part of the solution. German government comes in with EUR 9 billion of liquidity and EUR 8 billion in total of equity or equity type instruments. Fortum keeps its EUR 4 billion shareholder loan and EUR 4 billion. Everybody's carrying their responsibility. And again, I think I just want.
It's not relevant for the instruments as such, but I think the important thing is that us being such an important part of German, Nordic and European security of supply, we are all carrying our responsibility of maintaining that and making sure that our suppliers and our customers and societies who are relying on us can rest assured that we continue to deliver the security of supply they will need or they have needed and will need also even more going forward. We have been facing challenging times and we need to be prepared. We need to be strong in face of potentially continuing volatility and continuing turbulence in the energy market, which is now taking place.
Yeah. Okay. No, thank you very much. The answers are clear.
Looks like Bernhard would add.
Yeah. I just wanted to add to one aspect which you had asked on the. I think it had been at least implicitly mentioned in one of the earlier questions as well. What happens until October? This relates to the dual use of the KfW line now. Obviously it's there for margining purposes, but both the equity injection, the straight equity injection of the German state and the mandatory convertible can only be injected as capital into Uniper after an EGM, which can only happen after EU approval. This can be before or after October.
If until then, in order to cover ongoing losses due to curtailment and loss-making gas repurchases, further support for Uniper is needed, this would be also drawn from the KfW line. Once the equity is in, it is injected, as Markus said, in relation or in compensation for the losses incurred and from that liquidity contribution then the KfW line would be reduced as it or replaced by equity and a mandatory convertible.
Yeah. Very good. Thank you. That's clear.
Good clarification, Bernhard.
Please state your name and company. Please go ahead.
Hi, it's Alberto Gandolfi, Goldman Sachs. Apologies, I joined the call a bit later. Question specifically on the profitability of Uniper and the extent of losses the company may still have to endure. The release says October 1st, the date up until which the company would have to face losses, but there are certain conditions I understand, you know, Scholz was saying that could actually reduce this timeline to September 1st. Can you maybe elaborate in what scenario the company would have to face losses until September 1st, and what scenario until October 1st? And why, in your understanding, hasn't Article 24, 26 been triggered yet? And should we just expect a full pass-through starting on October 1st? Trying to gauge here the equity value clearly of Uniper. Thank you.
Germany has indeed amended its energy security laws and new provisions have now been approved and Germany could indeed do the full cost pass-through, I think. This is of course something that the German government should opine on, but they're balancing between how to deal with the societal impacts of the cost pass-through, how to use the tools they have available right now. This is then the 1st of September, 1st of October. That's what they have to decide what kind of instruments Germany puts in place and what kind of processes they need for the approval of those.
I think this is something where this is really up to the German government to opine on. I think we have a lot of understanding and sympathy for that, not only is it happening what we say here on the instrument side, but this 90% cost pass-through means that a huge amount actually of additional burden will be put on the German consumer and industry through the increased prices.
The question on Uniper's profitability and losses, that is something that Uniper will then specify obviously in the Q2, what is the situation with the company's profitability until the end of June, and to comment on what is then the outlook for the year, if it's possible to give such. Again, I don't know at which point you joined, but we have obviously the details in the materials. To cover the losses eventually. The losses will be covered by the equity type instrument of the mandatory convertible. Like Bernhard just said, in the meantime, we will then have the EUR 9 billion total liquidity facility which can be drawn upon just to cover the cash impact.
Eventually, the losses will be then covered by an equity-like instrument. Again, I would emphasize that it is in everybody's interest to minimize these losses. I mean, the burden is gonna be taken by somebody and these are not normal market conditions. Normally, we would have supplies, and we would have deliveries and they would be hedged back to back. Now we're in a situation of disruption and war, so the society as a whole, some parts of it have to carry this additional burden. Which means that now the German government is carrying part of it and German consumer will carry part of it. We will as a Fortum Group cover part of it.
It's in everybody's interest to minimize the impact, and that's why we are working with Bernard. Of course, German government is working with its energy security laws. We're working with the storage, and EU has come up with its proposals for the winter, how to reduce, how to really now cope and deal with this turbulence in the energy market and energy crisis that we are in. I think there are a lot of forces that are working to solve the situation in the best possible way. Therefore, for me, it would be very premature to start estimating what the losses may or may not be.
Again, I emphasize that, taking our responsibility, we tell about the issues openly and we have now, with the German government, with the good support of the Finnish government in spirit of good partnership, we have put in place these tools that enable us to go through even higher turbulence than there is in the market today.
Do you mind if I ask for a very brief follow-up? I hope, you know, you just achieved something extremely important today, so was not trying to minimize you with the question, but thank you for all the color you provided. Now, where I was also going, you know, if you allow me this light follow-up, is there any visibility at this stage as to what level of profitability the global commodities business of Uniper may be allowed to operate? Is it still gonna be a free market after October 1st , or is there going to be excluding the trading losses, let's say, from the gas procurement, or we just don't know as yet?
We know the conditions after 1st of October. We know the conditions before first of October. I think you're addressing a very important point. When we have a situation where a big supplier is curtailing its deliveries and companies cannot for different reasons pass on these additional procurement costs to the consumers, obviously the market is not functioning as it should. That's why we have agreed with the German government in this term sheet that we will now work together to develop a plan for a long-term sustainable structure for the gas market. This is a very key point that you're addressing here. We are not operating under normal circumstances.
That is crystal clear, and that is what we have been addressing just in the latest weeks with the gas curtailments. Already before that, with the EUR 10 billion, I mean, for our company, EUR 10 billion liquidity package to deal with the situation. This just shows we are dealing with extraordinary circumstances and clearly the way we have been used to working will not function anymore because such uncertainties have been introduced into the market. We have to find a new way and that work we are now committing to and have that finished until the end of next year.
Thank you very much.
Please state your name and company. Please begin.
Sibe-
...ahead.
Hi. This is Siamak Shakeri from Citi. I just had a couple of questions regarding Fortum's leverage and, sort of like at the Fortum level, where you expect your leverage ratio to land towards the end of the year. In addition, you mentioned Uniper has a commitment to staying investment grade. Does that also apply at the Fortum level? What are the considerations there? Especially, I know there's also a couple of upcoming maturities. How do you plan on dealing with those?
Again, we balance our growth capacity, we balance our credit rating quality and the dividend payment capability. Fortum Group had a very strong balance sheet position at the end of the year and at end of Q1. Now we'll see how the Q2 numbers will look like. For our business, having a solid investment grade rating is very important to provide the access to capital at an affordable cost at all market conditions. This is what we continue to strive for, and to have ability to invest in growth and to have an ability to pay a sustainable dividend. Of course, all of these have to be now assessed against what has happened in the recent weeks, actually.
It's been a rather short period and the first thing that we tried to address with this package was to make sure that we stabilize the situation. There's solid ground under us, so we can address this situation in the coming months from a position of being stronger than we have been in the last few weeks. We'll get to these absolutely very important questions that you raise now in the coming months and quarters to then give clarity on where do we stand and how do we go forward from here. The key thing was to stabilize and that has been done with this massive package agreed with Germany, with the good help of the Finnish government.
Okay. Thank you. Sorry, just to follow up on that. Do you know what is the maturity of the shareholder loan, and what will happen if Fortum elects not to convert into equity?
The shareholder loan remains.
Okay. Okay, great. Thank you so much.
Thank you.
Okay. Thank you all for your questions. At this point of time, I thank the international audience for your participation and wish you all a very nice rest of the day. We will now move on to the Finnish media questions, which we will take in Finnish.
Thank you very much, everybody.