April 26, 2018 / 3:42 PM / a year ago

Fortum plays down risks from Russian media criticism

HELSINKI (Reuters) - Finnish utility Fortum (FORTUM.HE) on Thursday played down concerns that Moscow might block its planned purchase of a stake in Uniper, after an article in a Russian government newspaper described Fortum as “a real threat” to Russian security.

FILE PHOTO: Fortum biomass combined heat and power plant is pictured in Jelgava February 3, 2014. REUTERS/ Ints Kalnins/File Photo

The article here in Rossiskaya Gazeta this month, by anti-Western economist Mikhail Delyagin, sparked worries in Finland that Moscow might turn down state-controlled Fortum's request for approval to buy a 47 percent stake in Germany's Uniper.

Uniper (UN01.DE) has some power plants in Russia, and the deal has to pass a Russian law that effectively prohibits foreign states or state-owned entities from gaining control over strategic national assets.

Fortum CEO Pekka Lundmark said on Thursday, however, he was confident of winning approval for the deal.

“We are in good discussion regarding ... (Russian) clearances and we expect to receive them by mid-year,” he told a news conference. “We have not received ... such messages or information that we would not be getting these clearances.”

Asked about the article, Lundmark said: “The negative articles that we have seen do not reflect the views of the Russian government ... Our view of the business environment is rather stable. We are calm in that sense.”

Fortum recently completed a 4.5 billion euro ($5.5 billion)investment program in Russia and last year generated sales of 1 billion euros in the country.

The risks of doing business in Russia are a familiar theme for the company.

A few years ago, Fortum was in talks with Russia’s Gazprom (GAZP.MM) over a plan to restructure Russian hydro and thermal power company TGC-1 (TGKA.MM).

Fortum was supposed to get a controlling stake in a planned spin-off hydropower company if it took a stake in a Russian-backed Finnish nuclear project here, which needed new investors.

Fortum made that investment, but the hydropower talks made slow progress, and last month Fortum said it had abandoned hopes for the Gazprom deal.

Several Finnish companies have a long history in doing business in neighboring Russia. Some, including retailers Kesko KESBV.HE and Stockmann (STCBV.HE), have recently pulled out of the market.

($1 = 0.8200 euros)

Reporting by Jussi Rosendahl; Additional reporting by Maria Tsvetkova in Moscow; Editing by Mark Potter

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