Hamburg has option to buy district heating network

Date: 17 January 2014

Swedish state-owned Vattenfall is to sell its majority share of the electricity grid company “Stromnetz Hamburg GmbH” to the City of Hamburg in Germany and has given the city the option to buy the district heating network in 2019.

Presently, Vattenfall owns 74.9 per cent and the City of Hamburg 25.1 per cent of both the electricity and district heating networks in Hamburg.

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 $748m (equity value). However, both parties have agreed on a minimum value of $673m.

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.

Vattenfall disclosed this information pursuant to the Swedish Securities Market Act.

Source: COSPP