Fortum's owner director – “The fact is that the scale of the events surprised me”

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Financial adviser Maija Strandberg about Fortum's EUR 8 billion financing package for Uniper: “The owner guidance was satisfied with the decision of the Fortum board and its reasons.” Financial advisor Maija Strandberg commented on the Uniper uproar at a press conference on July 22. Matti [email protected] at 9:01

Fortum is in the deepest crisis in its history. Financial adviser Maija Strandberg from the State Council's ownership steering department says in an interview with Iltalehti that the interaction between ownership steering and Fortum has been “even more condensed”. p>

In this story, Strandberg answers Iltalehti's questions. The interview was conducted by e-mail.

In the interview, Strandberg tells, among other things, how the decision about Fortum's 8 billion euro financing for Uniper was made.

1. Fortum started buying Uniper shares in 2017. How did the ownership control unit for information on the matter? Did the state owner bless the Uniper project?

– Significant strategic business decisions of joint-stock companies are made in boards. Corporate restructuring is the responsibility of the board of directors in the company. Matters related to corporate transactions will not be decided at the general meeting, unless they include the issuance of the company's own shares.

– I have been responsible for Fortum's ownership guidance since summer 2019. The owner guidance department no longer has the responsible officials of that time in office to answer questions in more detail. The public comments about the process correspond to my understanding of the course of things.

2. Fortum's majority owner, the state, has a strategic interest in Fortum, related to security of supply. Why did Fortum still take a big risk in Germany and Russia?

– Fortum's ownership has a strategic interest, ensuring electricity production in all conditions. The state's ownership of the company ultimately aims to ensure that electricity production in Finland is sufficient in all conditions. In the current situation, the state's interest is to ensure that the company is able to carry out its above-defined task without disruption and that its long-term operational and investment ability in the Finnish energy market is secured.

– Significant strategic business decisions of joint-stock companies are made in boards. The state owner conducts an active dialogue regarding the company's strategy and risk positions. In Fortum's ownership management, from the perspective of the state owner, the strategic risks related to the company's business had been identified, and they have not disappeared in the big picture. Furthermore, the risks of fossil energy production, especially coal in Central Europe, commodity trading business (gas) on the current scale and increased dependence on Russia are issues that are not strategic priority areas for the state owner.

– However, the reason for the current challenging situation is Russia's attack on Ukraine and the decision to use energy as a weapon against Europe. Uniper and Fortum have traditionally been solvent and financially successful companies with a common ambitious strategy to promote Europe's transition towards an emission-free and supply-secure energy future.

3. Can Fortum be at the same time an important company in terms of security of supply and a listed company that takes high risks with the goal of high returns for shareholders?

– The state aims for the best possible overall social and financial result in the management of its corporate assets. The state's strategic goal is, alongside securing security of supply, to utilize company assets also in strengthening domestic ownership, diversifying the business structure, creating new ones and promoting sustainable structural change. As the owner, the state wants to be long-term, consistent and predictable in its decision-making. As a long-term owner, the state has the conditions in the companies it owns to create opportunities for investments in future business operations.

4. Does Fortum have a place in the stock market at all?

– In addition to the state's 50.8% ownership, Fortum has a broad owner base. I'm not going to evaluate the question as such.

5. Do the problems caused by Uniper endanger Fortum's ability to carry out its security of supply mission?

– The state owner's ownership and strategic interest are expressly in Fortum. The state owner's primary goal when evaluating solutions to the Uniper crisis has been to help find a solution where the state's shareholder value in Fortum would be preserved and developed best in the long term.

– According to the assessment of the owner steering department, the negotiation result now reached between Uniper, Fortum and the German government, which the Fortum board has accepted after careful consideration and analysis, and with which the state owner, as one of Fortum's owners, has stated that he is satisfied, is the compromise solution that was achievable under these difficult circumstances and schedule .

6. What is Fortum's ability to pay dividends in the next few years?

– Fortum is CEO (Markus) Rauramonverbally stated that the company's dividend policy will remain unchanged. The company has not given its estimate of this year's dividend levels. The state values ​​a predictable dividend policy that takes into account both the company's financing needs and the owner's interests. For many years, Fortum has been a steady and significant collector of dividend income received by the state.

7. In January, Fortum gave Uniper an 8 billion euro financing package. Did the decision have the blessing of the state owner?

– The State Council's principle decision on ownership policy guides the activities of the Finnish state as a shareholder and applies to all limited companies in which the state is a shareholder. In its ownership management, the state follows the division of duties and responsibilities between the company's bodies and the owner according to the Limited Liability Companies Act.

– In addition, the Securities Market Association's management code and the OECD's corporate governance recommendations are applied to the operations, where applicable. It was a decision within the competence of Fortum's board of directors. Owner guidance was given background on the matter.

8. How did the ownership steering unit find out about the 8 billion euro package?

– It was an insider project concerning listed companies, within it and in compliance with the practices and requirements of the insider project.

– It was a decision of the Fortum board. Owner guidance was given background on the matter as part of an insider project. In that situation and with the information and assessment of the situation, the ownership management was satisfied with the decision of the Fortum board of directors and its reasons. However, the state owner reacted through the company's nomination committee and nominated an official member (Kimmo Viertola) to the board of Fortum.

9. Will Fortum get back the money and collateral it gave to Uniper?

– The state owner's primary goal when evaluating the solutions to the Uniper crisis has been to help find a solution where the state's shareholder value in Fortum would be best preserved and developed in the long term. As part of the arrangement, Fortum will not lose the 8 billion euros of internal funding it gave its subsidiary at the beginning of the year.

Fortum's owner director – ”The fact is thatä the scale of the events wasätted”

The uproar related to the Uniper subsidiary has pushed Fortum into crisis. AOP

10. Why did the state owner want its own representative on the board?

– In accordance with the State Council's principle decision on ownership policy, the state continues a long-term, dynamic ownership policy that protects the state's strategic interests . Fortum is one of the most significant companies in the state's company portfolio in terms of its market value, profit distribution, and social impact, and from the state's point of view, the ownership has a strategic interest.

– Fortum is in the middle of a major strategic change process. The state bears its responsibility as the largest owner and with this arrangement aims to ensure that the company's board knows the principles and thinking of the majority owner. The state is Fortum's largest owner with over 50% ownership and voting share. The appointment proposal is in line with the operating methods of other face-to-face significant owners.

11. How can the state have “its own representative” on Fortum's board, when according to the Limited Liability Companies Act, board members represent all shareholders and all shareholders must be treated equally?

– The appointment motion is in line with the operating methods of other significant owners. The state's goal is to act in the interest of all shareholders and the company. The company's board represents all shareholders equally in the name of the company's interest. It is clear that each member of the board acts independently and promotes the interests of all shareholders.

– If there are issues that the state would specifically like to pursue, they are brought to the general meeting for consideration or for information in discussions with the chairman of the board.< /p>

12. Does Fortum need more capital?

13. If Fortum needs more capital, is the state owner willing to finance the company?

– Should such a situation arise, the state owner will take a position on the situation on a case-by-case basis.

< p class="paragraph">14. Has the state owner succeeded in controlling Fortum's ownership?

– The state's business assets are a significant part of the common national assets. Owner guidance and its processes should be evaluated regularly, even critically. The risks related to the company's ownership had been identified in the owner's strategic work. However, the fact is that the scale of the events surprised. State ownership should be evaluated from the perspective of the overall benefit of the national economy, the development of the operations and value of the owned companies, and the efficient allocation of resources.

– The state's goal is to be an active, courageous and proactive owner, whose operations are based on independent ownership strategic influence and financial analysis. The state's independent ownership strategic influence is based on financial analysis and careful preparation. Based on these, the state sets its goals as the company's owner and influences and takes a position on the company's strategic and financial issues as necessary.

– In Fortum's ownership management, from the perspective of the state owner, the strategic risks related to the company's business had been identified, and they have not disappeared in the big picture. Furthermore, the risks of fossil energy production, especially coal in Central Europe, commodity trading business (gas) on the current scale, and increased dependence on Russia, are issues that are not the state owner's strategic priority areas. Disruptive situations in the European energy market can also be reflected in the Nordic energy market, and operators must prepare for these situations.

– We operate in ownership management in compliance with laws and good governance – but it is clear that in the case of Fortum, the interaction between ownership management and the company has been further condensed. The goal is to ensure that the will of the state owner is certainly understood and that the weight of ownership is taken into account in the strategy work.

– We meet regularly with Fortum's management, basically after the results reviews, and in owner steering we engage in an active dialogue with both the chairman of the board and the executive with the management at different levels, within the framework of good governance and securities market regulation, taking into account that the company is publicly listed, and the state is one of the shareholders.

IL listed: They were all in a position of responsibility when Fortum made costly decisions 26/07/2022 9:02 Comment: Fortum suffers losses of billions from the Uniper adventure 22/07/2022 15:19 Here is Uniper's rescue package – three points 22/07/2022 12:56 Analysis: Fortum will soon be in your wallet 16/07/2022 15:13

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