Siemens Energy has taken a significant step in its corporate history by early repaying the government guarantees. This decision is the result of positive operational development within the company over the last two years and enables Siemens Energy to become more independent.
Background and Motivation
At the end of 2023, Siemens Energy found itself in a difficult situation, particularly due to high losses in the wind power sector. These losses caused banks to be more hesitant in providing guarantees, which Siemens Energy urgently needed to fulfill its long-term large orders. Negotiations with the federal government regarding state support became public knowledge, leading to a dramatic fall in the share price by 40 percent.
The Repayment of the Guarantees
Siemens Energy has now early repaid the government guarantees amounting to 11 billion euros and instead has entered into a new guarantee agreement for 9 billion euros with a consortium of 23 international banks. This new agreement lasts for five years and is done without state backing.
Impact on Investors and Corporate Strategy
The early repayment of the government guarantees has several positive impacts on Siemens Energy:
- Dividend Payments and Share Buybacks: The repayment of the government guarantees paves the way for dividend payments and share buybacks. This can increase the attractiveness of the shares for private investors and strengthen confidence in the company.
- Independence and Stability: The new guarantee agreement with a bank consortium underscores confidence in the stability and future viability of Siemens Energy. This could lead to improved perceptions of the company in the market.
- Operational Development: The positive operational development of the company over the last two years has enabled this decision. It demonstrates that Siemens Energy has successfully addressed its challenges and is on a positive growth path.
Conclusion
The early repayment of the government guarantees by Siemens Energy is a strategic move that makes the company more independent and improves its future prospects. This decision has positive effects on investors and the corporate strategy, as it clears the way for dividend payments and share buybacks and strengthens confidence in the company’s stability.