Exclusive-Siemens Energy secures provisional deal for guarantees - sources

By Andreas Rinke and Christoph Steitz

BERLIN/FRANKFURT (Reuters) -The German government, Siemens AG and other parties involved in talks to cover billions of euros in project-related guarantees for Siemens Energy, have agreed a deal in principle, three people familiar with the matter said.

Siemens Energy makes gas and wind turbines as well as large converter stations, vital energy equipment for the country's efforts to gradually phase out fossil fuels, prompting Berlin to seek backing for what it considers a systemically relevant company.

Some details of the agreement are still being discussed, the people said, adding that Siemens AG, Siemens Energy's top shareholder with a 25.1% stake, was prepared to help by providing some of the guarantees.

Shares in Siemens Energy rose as much as 8% on the news and closed 6.3% higher, making them the top gainers among German blue-chips. Shares in Siemens also rose on the report and ended the day up 2.4%.

The agreement still needs to be formally drawn up and approved by all stakeholders, which could still take some time, the people said.

Siemens Energy in October disclosed talks with the German government, banks and Siemens AG over what sources said were 15 billion euros ($16 billion) in guarantees for project and warranty bonds needed to safeguard the company's 109 billion euro order book.

Banks have become stricter in granting those due to higher interest rates, Siemens Energy's wind turbine problems and S&P's move in July to downgrade the group's long-term credit rating to BBB-, just one notch above junk.

Up to 30% of Siemens Energy's order book is in downpayments, which is the share that needs to be backstopped by guarantees, people familiar with the matter have previously said, adding that around half of that, or about 15 billion euros, needed to be covered by the government, banks and Siemens.

Siemens Energy declined to comment on a provisional deal, referring to comments by German Chancellor Olaf Scholz on Wednesday saying a deal could be reached very soon if all parties were to share the responsibility.

A spokesperson for Siemens AG said the company remained in "very constructive talks to define the best possible solution in the interests of all parties involved".

Germany's Economy Ministry also said that talks were ongoing.

($1 = 0.9355 euros)

(Reporting by Andreas Rinke and Christoph Steitz; Editing by Matthias Williams and Emelia Sithole-Matarise, Kirsten Donovan)