Verbund gets green light for 1.0-bln-euro capital increase

(VIENNA) - The Austrian government has cleared the way for power giant Verbund to raise up to 1.0 billion euros (1.3 billion dollars) in fresh capital to finance new investments, officials said Tuesday.

Verbund has called an extraordinary general meeting in September to ask shareholders to approve the creation of up to 1.0 billion euros in approved, but as yet unissued shares.

But the capital increase can only go ahead if the state, which owns a 51-percent stake in the utility, agrees to buy about half of the shares.

The two coalition parties -- the Social Democrats and the conservative OeVP -- have been involved in a political tug-of-war over the plans in recent weeks.

But they settled their differences and reached agreement at a meeting late Monday, a finance ministry spokesman said.

Finance Minister Josef Proell has said the proceeds will be used to finance investments of up to 2.5 billion euros, mainly in the expansion of the group's hydro-electric power business.

Verbund says the timing of the share issue will depend on market conditions, but is expected to come in November or December.