Fortum draws on state loan deal as it braces for more turbulence

FILE PHOTO: Finnish energy company Fortum sign is seen at their headquarters in Espoo

HELSINKI (Reuters) -Fortum said on Monday it would draw a first 350 million euro ($337 million) tranche of a bridge financing deal made this month with the government to weather the energy crisis.

The Finnish utility inked the 2.35 billion euro agreement with government investment company Solidium to cover soaring collateral needs in the Nordic power derivatives market.

"For the moment, Fortum has sufficient liquid funds to meet current collateral requirements," Fortum said in a statement on Monday.

But drawing the first 350 million euro tranche by the end of September was a condition for the loan facility to remain effective thereafter.

Nordic power prices have eased somewhat in recent weeks from record levels in August but Fortum said it needed to remain prepared for continued market turbulence.

"Drawing the first tranche already in September ensures that (Fortum) has access to the liquidity facility should the collateral requirements increase again during the winter," it said.

The bridge loan carries a steep 14.2% interest rate.

($1 = 1.0376 euros)

(Reporting by Essi Lehto and Anna Ringstrom, editing by Terje Solsvik)