"The agreement is fair for all parties and creates a foundation for continued good cooperation with the City of Hamburg. Together we can ensure the secure operation and future-oriented development of the city's energy supply," says Tuomo Hatakka, Head of Region Continental/UK at Vattenfall.
Under the agreement, which has yet to be approved by the Hamburg Senate and Supervisory Boards of Vattenfall, the value of the entire electricity grid company has preliminarily been agreed at EUR 550 million (equity value). A jointly appointed external valuation company will determine the final value of the company. However, both parties have agreed on a minimum value of EUR 495 million. Through the sale of the electricity network business in Hamburg, Vattenfall is estimated to make a capital gain of at least EUR 300 million.
In addition to "Stromnetz Hamburg GmbH " (which employs about about 140 people) the transaction also includes the traffic service company "Vattenfall Europe Verkehrsanlagen GmbH" (which employs about 130 people), the Hamburg parts of the metering company "Vattenfall Europe Metering GmbH" (about 100 people) and network services company "Vattenfall Europe Netzservice GmbH" (about 580 people). For the metering and the network services companies, which will formally be transferred to the city of Hamburg no later than January 1, 2016, an additional price will be set by the external party in the same manner as for the electricity grid company. All distribution-related support functions in areas such as procurement, IT, accounting and HR will also be transferred to the City of Hamburg.
"We regret to have to sell the electricity network business, but will continue to have a strong presence in the region and work closely as a partner to the City of Hamburg," says Tuomo Hatakka. "In addition to the district heating business, we still serve more than 750 000 electricity and gas customers. We also have electricity production, a trading business and important competence centers for the German wind energy, electric vehicles and distributed electricity generation businesses. Furthermore, we still have a large number of people working with the decommissioning of our nuclear power plants."
Tuomo Hatakka added: "The deal also means that both parties undertake to refrain from legal action that could be encountered because of uncertainties about the terms of the district heating business."
Option for district heating
The district heating company "Vattenfall Wärme Hamburg GmbH" will continue to be operated by Vattenfall until at least 2019, with the City of Hamburg as a partner, with a 25.1 per cent share. In 2019, the City of Hamburg has an option to either buy the remaining shares of the district heating network or to remain with its minority share which the city bought in 2011.
In a potential sale of the district heating operations, two minimum prices have been agreed: If a gas-powered combined heat and power plant (CHP) will be built in the Wedel area, the minimum price will be EUR 1,150 million. If a decision on a CHP plant in Wedel has not been taken by the end of 2015, the minimum price will be EUR 950 million. The final value will be determined by an external party in the same way as for the electricity networks, if the City of Hamburg makes use of its option to buy the remaining shares of the district heating networks in 2019.
Vattenfall discloses this information pursuant to the Swedish Securities Market Act.