March 17, 2017 / 9:52 AM / 5 months ago

E.ON shares up after $1.4 billion capital raising

FILE PHOTO: E.ON headquarters in Essen, Germany, March 15, 2017.Thilo Schmuelgen

FRANKFURT (Reuters) - Shares in E.ON rose 1.7 percent early on Friday, a day after the German utility raised 1.35 billion euros ($1.4 billion) by selling 200 million new shares.

The cash-strapped company needs to pay nearly 10 billion euros by mid-year into a fund set up to pay for the German nuclear sector's long-term liabilities.

E.ON has said 2 billion euros of that amount will be raised via capital measures, which could include the sale of shares and issuance of hybrid bonds.

"Capital measure was thoroughly flagged and traders had enough time to position themselves. Shares should recover quickly," a Frankfurt-based trader said.

E.ON shares rose 1.7 percent to 6.95 euros apiece, among the biggest gainers in Germany's blue-chip index and among top European utilities.

The share sale suggests a price of about 6.75 euros apiece.

The company reported a record 2016 net loss of 16 billion euros on Wednesday.

The new shares were issued as part of E.ON's authorized capital and were sold to institutional investors, with Bank of America Merrill Lynch and Citigroup acting as joint bookrunners.

"In view of the impact from the payment of the risk surcharge to Germany's state-run nuclear fund in mid-2017, the purpose of the capital increase is to strengthen the equity and liquidity basis of E.ON," the company said.

Additional reporting by Tom Kaeckenhoff and Christoph Steitz; editing by Jason Neely

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