The extreme price increases on the energy markets are causing problems for the Axpo electricity group. The Federal Council stretches a rescue package and helps the company to liquidity.
Axpo is supported by the state.
tsf. The electricity company Axpo has submitted an application to the Federal Council for temporary liquidity support. The Federal Council has decided to grant the company a rescue package and a credit line of CHF 4 billion. As the state government announced on Tuesday, it relied on the modalities contained in the urgent federal law for subsidiary financial aid for electricity companies, which has not yet been fully discussed by Parliament. With the support, the Federal Council wants to prevent Axpo from running into liquidity problems, which in the worst case could jeopardize Switzerland’s energy supply.
Due to the war in Ukraine and the poor availability of the French nuclear power plant fleet, the European energy markets have seen sharp price premiums. Since the electricity and gas markets are closely linked, prices rose sharply in the summer with the disruption to Russian gas supplies. The situation has worsened in the last few days.
System critical company
To strengthen liquidity, Axpo will receive a credit line of 4 billion Swiss francs. Axpo is a system-critical electricity company for Switzerland. According to its own statements, the Federal Council wants to use the credit line to prevent Axpo from running into liquidity problems that could jeopardize Switzerland’s energy supply.
The credit line is subordinate. This means that in the event of insolvency, this would be served last. This is probably intended to send a signal to the financial market so that they continue to support Axpo financially and not run away.
At the end of March 2022, the electricity company still had liquidity of 4.4 billion francs and in the meantime placed a bond of 500 million francs. Yet
Ban on Dividends
The credit line is subject to strict conditions. With the decree by DETEC, Axpo is obliged to comply with the conditions set out in the ordinance on subsidiary financial aid to rescue system-critical companies in the electricity industry. This includes, for example, a ban on dividends as long as loans or interest payments are outstanding. During this period, Axpo and its affiliated Group companies may not sell any assets or undertake any restructuring that could jeopardize the repayment of the loan or any collateral. Axpo must also provide the necessary information and documents to the federal agencies responsible for implementation, as well as to ElCom electricity control and the Swiss Federal Audit Office (SFAO).
In the hands of the cantons
Axpo emerged from the former Nordostschweizerische Kraftwerke AG (NOK). The company’s shares are 100 percent owned by the north-eastern Swiss cantons and their cantonal utilities. The largest shareholder is the canton of Zurich with a stake of 18.3 percent and the electricity works of the canton of Zurich with 18.4 percent.