FRANKFURT: Germany's debt-burdened utility RWE has struck a deal to sell its oil and gas production unit RWE Dea to LetterOne Group the investment vehicle set up by Russia's Alfa Group conglomerate at an enterprise value of 5.1 billion euros ($7.10 billion).
RWE is struggling under 30.1 billion euros of debt and its chief executive Peter Terium said the agreement was a "major milestone" in meeting the company's goal for a strategic realignment.
"It is a further and essential step towards improving our financial strength," Terium added. RWE, Germany's second-biggest gas supplier after E.ON has also asked shareholders to provisionally approve a share issue of up to 20 percent of its existing share capital.
LetterOne was set up by billionaire Mikhail Fridman last year to invest $20 billion or more in global oil and gas projects. Terium said the fund intended to make RWE Dea the principal conduit for further investments in the industry.
RWE said the 5.1 billion euro enterprise value included around 0.6 billion in assumed liabilities and it expected the transaction to close later this year.
Sources told Reuters earlier this month that bidders had begun to submit binding offers for RWE Dea, and named BASF unit Wintershall, and Hungarian oil and gas Group MOL alongside Fridman.
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