After the Trump administration suspended one of Orsted A/S's (DNNGY.US) two offshore wind projects in the United States, market concerns have emerged regarding the feasibility of the Danish renewable energy giant's planned $9.4 billion share offering. Company executives will meet with shareholders on Tuesday to stabilize investor confidence.
Orsted A/S management plans to hold meetings with investors and advisors in London. The previous day, its Copenhagen stock price plummeted 16% to historic lows, with market capitalization shrinking to 75.3 billion Danish kroner (approximately $11.8 billion). The Danish government, which holds a majority stake, still plans to participate in this 60 billion kroner rights offering.
The U.S. Bureau of Ocean Energy Management rejected construction permits for the "Revolution Wind" project last Friday—this wind farm project near the Rhode Island coast was already 80% completed. This move has sparked market concerns that Orsted A/S's other wind project "Sunrise Wind" being constructed near the New York coast may face the same fate.
DNB Carnegie analyst Emil Haargaard stated that if both projects are cancelled, Orsted A/S would need to pay a total of approximately 12 billion kroner in penalties. While the probability of this scenario is relatively low, the unpredictable situation creates uncertainty for the share offering plan.
"A rights offering of this scale requires significantly reducing uncertainty and clearly resolving execution risks in the U.S. business," Haargaard wrote in a report.
As a long-time darling of the renewable energy sector, Orsted A/S has consistently failed to replicate its European business success in the U.S. market. Trump's antagonistic stance toward wind power adds further uncertainty—court documents filed separately last Friday show he is attempting to block Orsted A/S's development of another wind farm near Maryland.
The focus for investors is whether Orsted A/S can find ways to appease U.S. regulators and how long this process will take. A glimmer of hope exists: when Norwegian state oil company Equinor ASA (EQNR.US) reached an agreement allowing new natural gas pipeline construction for its New York offshore wind project "Empire Wind," Trump reversed his decision to halt that project.
Connecticut Governor Ned Lamont stated on Monday that "there is room for negotiation," and Orsted A/S is hoping for a similar breakthrough. The rights offering is jointly underwritten by BNP Paribas, Danske Bank, JPMorgan Chase, and Morgan Stanley.
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