4.8 Contingent liabilities and guarantees
ANAF’s tax audit at Alpiq Energy SE
After the tax audit on the Bucharest branch of Alpiq Energy SE, Prague, the Romanian tax authority ANAF (Agenţia Naţională de Administrare Fiscală) issued the final tax assessment notice to Alpiq in the amount of RON 793 million or CHF 166 million for value added tax, corporate income tax and penalties (including late payment penalties) for the period of 2010 to 2014 in September 2017. The tax assessment determined by ANAF is being contested on account of its merits and the amount assessed, as Alpiq is convinced that the activities of Alpiq Energy SE in Romania have always been carried out in accordance with the applicable Romanian and European rules and regulations. Alpiq’s position is supported by current assessments provided by external legal and tax experts. Alpiq filed an objection with ANAF against the tax assessment in 2017. In the main matter, ANAF supported its own view and dismissed the objection with regard to an amount of RON 589 million or CHF 123 million as being without merit. Alpiq contested the decision on the appeal made by ANAF by making use of the legal means of appeal at its disposal. In the ruling from 19 October 2021, the competent Romanian administrative court agreed with the reasoning of Alpiq Energy SE and revoked the decision of ANAF as unlawful. The ruling is not yet legally binding and could be contested by ANAF in the second instance, as assumed by Alpiq. With regard to an amount of RON 204 million or CHF 43 million, ANAF repealed the decision from the tax audit and ordered a reassessment. The reassessment will not take place until there is a final ruling from the proceedings concerning the amount of RON 589 million.
On 3 September 2019, the court of appeal in Bucharest endorsed Alpiq’s request that the tax assessment in the amount of RON 589 million is not enforceable until a last-instance court decision has been reached. This ruling is legally binding. Alpiq is demanding reimbursement of the costs arising from the tax assessment and other expenses from ANAF and therefore filed a corresponding claim at the court of appeal in Bucharest in autumn 2019. This was partially endorsed in a first-instance ruling and Alpiq was awarded an immaterial amount of compensation for damages due to ANAF’s illegal safety measures. Alpiq initiated civil proceedings against ANAF for the portion of the claim for damages that was not covered, amounting to around CHF 2.5 million. The civil lawsuit is pending before the court of first instance in Bucharest.
Alpiq continues to deem it unlikely that this assessment will result in a negative outcome for the company and has therefore decided not to record a liability for the tax assessment.
Compensation review proceedings against Alpiq Holding Ltd.
The compensation review proceedings filed against Alpiq Holding Ltd. by the two investors Knight Vinke (KVIP International V L.P.) and Merion Capital (Merion Capital LP, Merion Capital ERISA LP and Merion Capital II LP) pursuant to Sec. 105 of the Swiss Merger Act (FusG) aim to achieve a judicial review of the compensation of CHF 70 per share approved by both Annual General Meetings and paid by Schweizer Kraftwerksbeteiligungs-AG (SKBAG) in the squeeze-out merger. The two investors are demanding compensation based on the initial value of the registered shares of Alpiq Holding Ltd., amounting to at least CHF 140 (Knight Vinke) or CHF 131 (Merion) per share. This would correspond to additional compensation of around CHF 195 million to be paid by Alpiq Holding Ltd. to all minority shareholders who received compensation. Arbitration proceedings for this took place in June 2021, which did not lead to an out-of-court settlement, as expected. Following this, the two plaintiffs filed a formal complaint. A first-instance ruling is not expected until the second half of 2023.
In the context of the voluntary public purchase offer by SKBAG, PricewaterhouseCoopers (PwC) was engaged as an independent expert to prepare and submit a fairness opinion on the appropriateness of the offer price from a financial perspective. At the time, PwC concluded that the offer price is fair and appropriate from a financial perspective. In connection with the squeeze-out merger, Alantra Ltd. was engaged to compile an independent valuation report for the members of the Board of Directors of Alpiq Holding Ltd. and Alpha 2020 Ltd. The valuation report of Alantra determined a value range of CHF 63.30 to CHF 72.50 per share held in Alpiq Holding Ltd. and therefore confirmed that the agreed compensation of CHF 70 per share is appropriate.
On account of the facts and circumstances known at that time, in particular the two independent valuation reports which deemed the amount of compensation per share to be appropriate, Alpiq considers it unlikely that this litigation will result in a negative outcome for the company.
There were no significant contingent liabilities from pledges, guarantees and other commitments to third parties in favour of third parties at the reporting date, as was also the case at 31 December 2020. For additional obligations in connection with partner power plants, please see note 4.3. Contingent liabilities in connection with the sale of the Engineering Services business can be found in note 5.1.