RWE Falls to Lowest in Seven Weeks on Lack of Growth Funding

  • CEO Terium says political uncertainty dicourages investors
  • Company ``traded like a penny share,'' Societe Generale says

RWE AG fell to an almost seven-week low after Chief Executive Officer Peter Terium said Germany’s largest power producer has trouble finding funding for growth.

RWE dropped as low as 10.90 euros and was down 3.5 percent at 11.065 euros by 11:41 a.m. in Frankfurt, making it the biggest loser on Germany’s benchmark DAX index. About 25 percent of the daily three-month average had been traded.

“An American investor who puts 1 euro into RWE today has no guarantee that this money flows to growth or that policy changes conditions in a way that the euro has to go somewhere else,” Terium told Frankfurter Allgemeine Zeitung in an interview. Spokeswoman Sabine Jeschke confirmed his comments by phone from Essen Monday.

RWE, Europe’s largest carbon-dioxide emitter, is being hurt in Germany’s transformation from an economy powered by fossil fuels and nuclear to one based on renewable energy. The utility is the worst performer on the DAX this year and in September was removed from the Euro Stoxx 50 Index of the region’s biggest companies as wholesale power prices are at the lowest level in more than a decade.

The CEO’s right that there’s “a lot of political uncertainty,” said Lueder Schumacher, an analyst at Societe Generale SA, who has a hold recommendation on the stock with a price estimate of 12 euros. “RWE is currently traded like a penny share, the smallest news massively impacts the share price,” he said Monday by phone from London, adding he expects the volatility to subside.

Some investors may have misunderstood Terium, who didn’t rule out that a capital increase in relation to a potential Arab investor, will return to the agenda, Schumacher said.

RWE is still in talks on cooperation in projects with an Arab partner, which had been interested in buying a stake of the utility earlier this year, Terium said on Nov. 3. Talks are not exclusive, he said, not ruling out the company may revisit the plan to sell a stake later.

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