Wind generator Ørsted's shares sink as it makes $9bn cash call
The share price for Denmark's Ørsted tumbled to an all-time low after it told investors on Monday that the 'extraordinary situation' facing the industry meant it would need to tap shareholders to cover the costs of its plans.
It said 'recent material developments in the US' meant it was unable to raise the money required by selling a stake in its new project off the eastern seaboard of the US, as planned.
The company behind some of the world's biggest offshore windfarms typically covers its costs by selling a stake in each project once work is under way. However, the president's hardline stance against offshore wind has slashed the values of its US projects.
While the Biden administration was supportive of the burgeoning offshore wind sector, Trump sent shivers through the industry by ordering a review of offshore wind permitting and leasing on his first day back in the White House in January.
The review dealt a blow to an industry still reeling from a surge in costs driven by supply chain problems following the pandemic, and fast-rising interest rates which have made building new projects far more expensive.
Trump has a long-held dislike of offshore windfarms which dates back at least 14 years to a spat over North Sea wind turbines that were visible from one of his golf courses in Scotland. He has recently claimed that windfarms should not be allowed because they generate 'the worst form of energy, the most expensive form of energy' and also 'kill the birds'. These claims have been refuted by experts.
Within months of Trump's return to power his administration issued a stop-work order to a project spearheaded by the Norwegian wind developer Equinor. The order was a shock to many industry commentators who had believed that projects that had already secured their approvals would be safe from the industry review.
Ørsted is planning to complete the Sunrise Wind project off the coast of New York and the Revolution Wind project off Rhode Island. It said the plans to raise more than $9bn would strengthen its capital structure and provide 'financial robustness' while it moves ahead with global plans to build enough offshore windfarms to power more than 8m homes within the next two years.
The fundraising will be backed by the Danish government, which owns half of Ørsted. But the plans have sparked concerns in the market, which caused its share price to slump to 220.5 kroner on Monday morning, below its 2016 flotation price of 235 kroner.
Rasmus Errboe, chief executive, said: 'Ørsted and our industry are in an extraordinary situation with the adverse market development in the US on top of the past years' macroeconomic and supply chain challenges.'
He added: 'The rights issue will reinforce our ability to realise the full value potential of our existing portfolio and capture future value-creating opportunities in offshore wind.'
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