Latest news with #RasmusErrboe
Boston Globe
19 hours ago
- Business
- Boston Globe
As Trump curbs wind farms, Orsted plans $9.4 billion share offering
Existing shareholders will have the right to buy shares proportional to their ownership. Orsted said that the Danish government, which owns 50.1 percent of the company, had agreed to subscribe to its 'pro rata' share. Advertisement The planned share sale amounts to about 45 percent of Orsted's market value Friday. In the past, Orsted, which operates the Block Island Wind Farm off the coast of Rhode Island, has reaped profits by initiating projects and then selling off large stakes in them to investors who want exposure to green energy. Get Starting Point A guide through the most important stories of the morning, delivered Monday through Friday. Enter Email Sign Up In its announcement of issuing new shares, the company appeared to blame the Trump administration, which has adopted a skeptical approach to renewable energy and offshore wind in particular. 'Orsted 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,' Rasmus Errboe, the company's chief executive, said in a statement Monday. It is widely accepted in the energy industry that new projects are highly unlikely as long as Trump is in office, but Orsted's announcement shows that there is a cloud over those already under construction as well. Advertisement Orsted, which has led the development of offshore wind farms in Europe, has stumbled badly in the United States, where it had bet heavily. Well before Trump's reelection in 2024, inflation and higher interest rates slashed the profitability of planned projects, forcing the company to write off large projects and cancel wind farms. More recently, the Trump administration's actions have raised questions about whether there would be a future for offshore wind in the United States, once considered one of the world's most promising markets. The Trump administration is withdrawing offshore acreage from availability for new wind farms and threatening reviews that could lead to delays or halts of those already under construction. 'The Department of the Interior is ending special treatment for unreliable energy sources, such as wind,' the administration said last month. Such moves could hit Orsted, which is building two other wind farms off the East Coast of the United States, including Revolution Wind near Rhode Island and Connecticut. Tariffs on imported equipment like wind turbines will also raise costs. Orsted's $9.4 billion estimate of the additional funding now needed to complete Sunrise Wind seems 'very high,' Deepa Venkateswaran, a utility analyst at Bernstein, a Wall Street research firm, wrote in a note to clients. As a result, she suggested that there might be other risks lurking, including further negative developments in the United States, that 'the company is being less open about.' This article originally appeared in . Dana Gerber of the Globe staff contributed to this report. Advertisement
Reuters
a day ago
- Business
- Reuters
Breakingviews - Orsted's big cash call jars with its fresh start
LONDON, Aug 11 (Reuters Breakingviews) - Rasmus Errboe's fresh start has already been blown off course. The boss of $20 billion Orsted ( opens new tab, who took the helm in February, is asking shareholders for 60 billion Danish crowns ($9 billion) to cut debt and keep building Sunrise Wind, a troubled U.S. project. A 29% slump in the Danish offshore developer's share price reflects that its big problem under predecessor Mads Nipper – asserting that the worst was past only to then unveil a new nasty surprise – hasn't really gone away. The capital raise comes on the back of a stretched balance sheet battered by inflation, supply-chain delays, and shifting subsidy policies that have upended the nascent U.S. offshore wind industry. These factors already led Orsted to scrap, opens new tab some U.S. projects and book hefty impairments, but as recently as April Errboe was still confident in his project funding. Now, a stop-work order by the wind-phobic administration of President Donald Trump in April to a separate Equinor ( opens new tab scheme has left the Danish group concerned it wouldn't be able to finance the buildout of Sunrise Wind, even though the order was lifted in May. That's because the funding hinged on Orsted selling stakes in the project to third parties – 'farm-downs', in the terminology – despite being only at an early stage of construction. The U.S. government's hostility and unpredictability implies less lucrative farm-downs, meaning Errboe has to shoulder the cost on his company's balance sheet. To preserve its investment-grade credit rating, that means raising 40 billion crowns for Sunrise Wind, plus an extra 20 billion crowns to cater for extra capital spending needs. Errboe can't do much about Trump. Yet rivals like Iberdrola ( opens new tab and SSE (SSE.L), opens new tab tend to sell stakes and recycle capital later on, when projects are near completion or operational. In good times, Orsted's approach frees up capital early, fueling faster growth. But when buyers turn cautious and financial conditions tighten, the model leaves it scrambling for cash to keep the construction going. Throw in the fact that Errboe has cut forecasted return on capital employed and 2026 EBITDA, and investors have another unpleasant and stock-specific shock. Given that the issue is fully underwritten by Morgan Stanley (MS.N), opens new tab and backed by the Danish state, which owns 50.1%, Orsted will get its cash. Errboe can point to the fact that only 20% of his offshore wind capacity under construction will emanate from the U.S. Hence when the hole is plugged he still sees scope for 13% group returns on capital employed from 2028. Still, the scale of the capital needs relative to its now-$14 billion market cap is striking. Plenty of minority investors will think hard before playing ball - Equinor, which holds a 10% stake, merely said it would "assess the proposal". Errboe's task is to convince them that he isn't just buying time before the next shock. Follow Yawen Chen on Bluesky, opens new tab and LinkedIn, opens new tab.
Telegraph
a day ago
- Business
- Telegraph
Energy giant takes £4bn hit as Trump goes to war on ‘con job' wind farms
More than £4bn was wiped off the value of the world's biggest offshore wind farm developer after Donald Trump declared war on renewable energy projects. Shares in Ørsted plunged by an unprecedented 29pc in early trading to a record low after it revealed it would seek to raise 60bn Danish kroner (£7bn) from a new stock offering as it battles a downturn in the industry. The company, which is majority owned by the Danish state, will hold an extraordinary general meeting on Sept 5 to approve the plans. Rasmus Errboe, chief executive, said the company had been hit by 'adverse market developments in the US', where the president is waging a war against the wind industry. Mr Errboe said the company's fundraising through shareholders was the 'best solution' to strengthen the company's balance sheet and fund its Sunrise Wind development, off the coast of New York. 'Con job' It comes after Mr Trump briefly halted work on a separate wind farm off the coast of New York in April and last month branded the renewable energy source a 'con job' during a visit to Scotland. He said at his Turnberry golf course that turbines spoiled the landscape and sucked in hefty subsidies, adding: 'The whole thing is a con job. It's very expensive.' President Trump has rolled back subsidies for the renewables industry under his tax cutting bill working its way through Congress. He suspended licensing for new wind farms on his first day back in office in January. His hatred of turbines stems from a long planning battle he had with Scottish authorities. He opposed plans for a major North Sea wind power development that he complained could be seen from his Aberdeenshire course, but lost the case. Ørsted usually funds wind farms by selling off stakes in the projects. However, it said on Monday that it was cancelling its planned sale for its New York scheme in favour of the new share issue. Mr Errboe 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.' Lene Skole, chairman, said the company faced an 'unprecedented regulatory development in the US' which meant raising money from shareholders was 'the best path forward'. Jenny Ping, an analyst at City, said Ørsted's decision was 'sensible' in the long run but 'likely painful' in the short term, while Ahmed Farman, at Jefferies, added the move was 'clearly negative'. Under the share issue, the Danish state will maintain its 50.1pc stake in the energy company, Ørsted said. A spokesman for Norway's Equinor, which holds a 10pc stake, said it would 'assess the proposal'. The company also plans to raise more than 35bn Danish kroner from selling stakes in its energy projects over the next two years. It plans to invest around 145bn Danish kroner during that time and insisted its earnings guidance for this year remains on track. The fundraising plans come amid wider turbulence at Ørsted. In May, the company pulled the plug on the 2.4-gigawatt Hornsea 4 project off the east of England as it blamed rising costs and interest rates. Wind farm operators are expected to be offered bumper subsidies by Ed Miliband, the Energy Secretary, to attract bids for renewable energy contracts in an auction that launched last week. A wind auction in 2023 failed to receive any bids after ministers initially refused to raise the subsidies on offer. They later backed down, with Mr Miliband overseeing a record £3bn of contract for difference awards last year.
Reuters
a day ago
- Business
- Reuters
Denmark's Orsted seeks $9.4 billion as US wind market falters
COPENHAGEN, Aug 11 (Reuters) - Denmark's Orsted ( opens new tab on Monday asked its shareholders for 60 billion crowns ($9.4 billion), sending the stock sharply lower as the wind farm developer seeks to boost its finances amid U.S. President Donald Trump'sopposition to wind power. Struggling in recent years with soaring inflation and logistical problems that sent costs soaring, the offshore wind industry faced a further setback when Trump suspended licensing on his first day back in office in January. "Orsted and our industry are in an extraordinary situation with the adverse market development in the U.S. on top of the past years' macroeconomic and supply chain challenges," CEO Rasmus Errboe said in a statement. Orsted shares fell as much as 29% to a nine-year low of 220.2 crowns. At 0815 GMT, they were down 26% at 228.4 crowns. The rights issue is worth almost half of Orsted's market value of around 130 billion crowns as of Friday's close. Jefferies analysts said in a note that while the fundraising would help to de-risk the company's balance sheet, the near-term dilution for shareholders "seems substantial". Orsted said in a statement that the Danish state, which owns 50.1% of the company, had agreed to subscribe to a similar portion of the share issue, thus retaining a majority stake. A spokesperson for Norway's Equinor ( opens new tab, which holds a 10% stake in Orsted, said it would "assess the proposal". Any shares not subscribed for by the existing shareholders or other investors will be fully underwritten by Morgan Stanley & Co International to provide certainty that the rights issue will be completed, Orsted added. Equinor itself last month took a nearly $1 billion write-down on its separate offshore wind portfolio in the United States, blaming U.S. tariffs and uncertainty in the U.S. market. Trump campaigned on a promise to end the offshore wind industry, saying it is too expensive and hurts whales and birds. In April, his administration ordered Equinor to halt development of a fully-permitted wind farm off New York, sending shockwaves through the industry. The order was, however, reversed the following month. Orsted said uncertainty in the U.S. market had forced it to halt a planned partial divestment of its Sunrise wind project under development also off New York. The company said it would continue planned divestments of stakes in its Changhua 2 offshore wind farm in Taiwan and Hornsea 3 in Britain. In addition, it has started a process of selling its European onshore wind business, which it said would raise more than 35 billion crowns. Errboe said proceeds from the rights issue would strengthen Orsted's capital structure and help it develop the 8.1 gigawatts of offshore wind projects it currently has under construction by 2027. It said in a separate statement that its earnings before interest, tax, depreciation and amortisation, excluding new partnerships and cancellation fees, rose 9% year-on-year to 13.9 billion crowns in the first half of 2025. It maintained full-year guidance for an adjusted EBITDA of 25 billion-28 billion crowns and gross investment guidance of 50 billion-54 billion. ($1 = 6.3953 Danish crowns)
Reuters
4 days ago
- Business
- Reuters
Energy firm Orsted weighs up to 5 billion euros rights issue, Bloomberg News reports
Aug 8 (Reuters) - Danish energy firm Orsted ( opens new tab is considering raising as much as 5 billion euros ($5.83 billion) from a rights offering to shore up its finances, Bloomberg News reported on Friday, citing people familiar with the matter. The fundraising plan could be announced in the coming weeks if Orsted decides to proceed, the report said. Orsted's market value has plunged from its 2021 peak, driven by rising costs and supply chain disruptions. U.S. President Donald Trump's opposition to offshore wind has further eroded investor confidence. The company has onshore wind, offshore wind, solar and storage operations across Texas, the U.S. Midwest and East Coast markets. Orsted declined to comment on the Bloomberg report. There is no certainty a deal will proceed, and the size and timing of any potential offering could shift depending on market conditions, the report added. Rasmus Errboe, who became Orsted's CEO in January, has the challenge of restoring investor confidence and streamlining the company to adapt to the changes the offshore wind industry is facing. In May, the Danish company scrapped its plan to build a major offshore wind farm in Britain, citing a deteriorating global business environment for renewables. During its first-quarter earnings, the company kept its 2025 outlook, excluding new partnerships and cancellation fees, unchanged. It is scheduled to report its half-year 2025 results on August 13. ($1 = 0.8576 euros)
