By Alexander Hübner, Tom Käckenhoff, Riham Alkousaa and Christoph Steitz
MUNICH/DUESSELDORF/BERLIN/FRANKFURT (Reuters) - Siemens Energy will present a deal for billions of euros in project-related guarantees backed by the German government when it releases annual results on Wednesday, three sources familiar with the matter told Reuters.
The company in October disclosed talks with the German government, banks and former parent Siemens AG (ETR:SIEGn) over what sources said were 15 billion euros ($16 billion) in guarantees for project and warranty bonds needed to safeguard the firm's 109 billion euro order book.
Of the 15 billion, banks involved in the talks will bear around 12 billion euros, of which the government would backstop 7.5 billion, the people said, adding a solution had also been found for the remaining 3 billion, without specifying.
"The aim is to have an agreement ready by Wednesday," a third source told Reuters, adding that final details would be determined following a Siemens AG board meeting on Tuesday.
Shares in Siemens Energy rose as much as 7% on the details of the agreement, which were first reported by Handelsblatt, and were up 4.9% at 1454 GMT.
Siemens Energy, Siemens AG and the German economy ministry all declined to comment.
Reuters first reported last week that all stakeholders had reached an agreement in principle to cover the guarantees, helping the group's shares to recover after news of the discussions pushed the stock to a record low last month.
A member of the Free Democrats, junior partner in the German government coalition, called for the removal of Siemens Energy Chairman Joe Kaeser, who as Siemens CEO oversaw the botched merger of Siemens and Gamesa as well as Siemens Energy's spin-off.
LOST TRUST
"Removing him would be the right step to rebuild lost trust in the company's future path," said Michael Kruse, energy policy spokesperson for the party's parliamentary group.
Siemens Energy makes gas and wind turbines as well as large converter stations, vital energy equipment for the country's efforts to gradually phase out fossil fuels, prompting Berlin to seek backing for what it considers a systemically important player.
Deepening problems at the group's wind turbine unit and a subsequent move by S&P to cut the group's long-term credit rating to BBB-, just one notch above junk, in July had made banks more reluctant to provide the guarantees.
Siemens AG, which spun off Siemens Energy in 2020, will also provide support by buying most of the 24% stake Siemens Energy owns in Siemens Ltd, the two group's Indian joint venture that was not disentangled during the spin-off.
Siemens AG will pay more than 2 billion euros for around 18% of Siemens Ltd, which would bring its own stake in the joint venture to around 70%, the people said.
That stake is currently valued at around 219.6 billion Indian rupees ($2.64 billion), meaning Siemens AG would get the stake at a significant discount, confirming a Reuters report from last week.
Siemens Energy's remaining stake in Siemens Ltd, as well as an annual 250-million-euro payment it makes to Siemens AG for the use of the trademark rights, will be used as a security against the guarantees, one of the people said.
($1 = 0.9349 euros)
($1 = 83.2917 Indian rupees)