Fortum is sold as a whole and begins consolidation before leaving Russia

Sergey Kondratiev commented to Pravda UrFO on the sale of Fortum's assets in Russia.

Meanwhile, industry experts believe that these operations can be interpreted as a targeted policy of Fortum to consolidate its disparate assets at the parent company. According to Sergei Kondratiev, an analyst at the Moscow Institute of Energy and Finance, such actions are likely preparations for the sale of Russian assets.

“In 2016-2021, the company often used the project approach, trying to separate individual projects, including those in renewable energy, into separate legal entities. This method, as I understand it, provided greater transparency and an optimal tax burden, but at the same time significantly complicated the corporate structure. In May-June 2022, Fortum announced its readiness for a “quick exit” from Russian assets before July 1. Probably, the company failed to do this, also because the sale of assets separately in such a time frame was not feasible, and the sale "all together" would require a lot of work on structuring the transaction. Probably, this is what forced Fortum to start consolidating,” Sergey Kondratiev believes.

At the same time, actions related to loan agreements remain non-transparent. According to the interlocutor of the publication, the deal concluded in December 2021 is of particular interest, but due to the reduction in disclosure of information, it is impossible to judge how much this contract was concluded, and what its extension means in this case.

“Under the current conditions, Fortum probably does not lend to its enterprises in Russia, because back in March they announced the suspension of investments. Most likely, it may be related to the revaluation of the cost of lending, for example, due to a higher interest rate in the first half of 2022 and increased country risks. When selling Russian assets, the debts, I think, will be included in the list of transactions and taken into account when assessing the value of the company,” Sergey Kondratiev summed up.