RWE supervisory board approves spin off of renewables business

11th December 2015, Comments 0 comments

German power giant RWE said Friday its supervisory board had approved plans to spin off its renewables, grids and retail operations and take the unit public.

"At its meeting today, RWE's supervisory board unanimously approved the executive board's plans to restructure the group," it said in a statement.

"The company will transfer its renewables, grid and retail operations in Germany and abroad to a new subsidiary, which it intends to list on the stock market towards the end of next year."

RWE unveiled the plans on December 1, echoing a similar strategy being pursued by rival E.ON.

The aim was to "create a platform for growth with its own access to the capital market. This will strengthen the viability of the group as a whole."

The restructuring was "in response to the transformation of the European energy landscape," said chief executive Peter Terium.

Germany's power suppliers have been hit in recent years by government plans to eliminate nuclear power by the next decade and champion a so-called "energy transition" away from fossil fuels such as coal towards renewable energy sources such as the wind and the sun.

Power utilities have complained that the cost of having to close down their nuclear power plants and the heavy subsidies afforded to renewable energy have pushed them deeply into the red.

RWE has said that based on the pro-forma figures for 2015, the new company would achieve external revenue of more than 40 billion euros ($42 billion) and underlying profit of over four billion euros.

The company, which like RWE would continue to be based in Essen, would employ approximately 40,000 of the RWE group's nearly 60,000-strong workforce, it said.

The parent group is to focus on conventional power generation and trading.

The deputy chief of the supervisory board, Frank Bsirske, said that "in light of the radical changes to the energy landscape, this is a necessary step and the right one. By taking this decision, we are giving the entire workforce long-term prospects."

He continued: "Only a healthy RWE is a secure employer. We hope that the restructuring will create new jobs in future-oriented business fields over the medium and long term."

CEO Terium said was "pleased that the supervisory board is supporting our strategy unanimously."

"This decision sends the clear signal that we have found our answer to the transformation of the energy system. We will implement our plans for the group's new structure as quickly as possible and as carefully as necessary," Terium said.

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© 2015 AFP

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