Alpiq May Fire 12 Traders in Nordic Power Exit to Cut Debt

Alpiq Holding AG (ALPH), Switzerland’s biggest utility, may fire 12 Nordic power traders as it plans to pull out of the region after more than a decade to cut debt.

Alpiq may close its Oslo-based subsidiary, which has been for sale since last year, and dismiss 25 people, Frode Berntsen, managing director, said today by phone from Oslo. They include the traders who buy and sell electricity on behalf of clients, he said.

Alpiq is cutting staff and plans to sell assets to reduce costs and debt after forecasting earnings this year would be “significantly lower” than in 2011, according to its Nov. 12 earnings statement. The Norwegian division had its fourth consecutive annual loss last year, of 17 million kroner ($3 million), according to data from the country’s Broennoeysund business registry.

“Difficult market conditions, dropping power prices and a bid to cut debt has prompted us to start preparations to withdraw from Norway, while instead focusing on Switzerland and neighboring countries,” Martin Stutz, a company spokesman, said today by phone from Olten, Switzerland.

The company’s net debt rose more than five fold to 4.7 billion francs ($4.98 billion) since 2006, according to data compiled by Bloomberg. Alpiq has 4.2 billion francs of bonds outstanding, including 400 million francs on notes maturing in 2013, according to the data. The extra yield investors demand to hold Alpiq’s 3 percent bonds due 2022 instead of Swiss government debt has increased to 164 basis points today, the most in 2 1/2 months, the data show. The yield spread was as narrow as 145 basis points on Aug. 24.

Five-Year Low

Norway no longer fits into Alpiq’s business structure, which operates power stations in Switzerland, Italy, Germany, France, Hungary, Spain and the Czech Republic, Stutz said.

The year-to-date average price for Nordic day-ahead power has declined 38 percent from the same period last year to a five-year low of 29.97 euros ($38.27) a megawatt-hour, according to data from the exchange.

Business activities in Oslo are headed for a profit this year, according to the company.

“In Norway, our power portfolio management has gone very well in the past year, with good profitability and a bright outlook for the future, which makes the timing of this decision very bad for us, though we must respect what our owners decide,” Berntsen said.

Stake Sale

Alpiq Norway manages more than 5 terawatt-hours of power portfolios for third parties, mainly larger industrial customers, according to its website. Alpiq Holding sold its Finnish power portfolio management company Energiakolmio Oy in March.

In September, the company announced plans to sell a 61 percent stake in Swiss electricity supplier Societa Elettrica Sopracenerina while it completed its withdrawal from the Italian retail sector in July. Alpiq said in January it would cut 170 positions affecting the energy-trading division and support functions.

The company is considering additional divestments, which may include two coal-fired power plants in the Czech Republic, it said on Nov. 12.

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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