COPENHAGEN: Wind farm developer Orsted’s plan to raise much-needed capital is at risk following a U.S. order to halt construction of a near-complete project, and the Danish group’s share price could come under pressure on Monday, analysts said.
Orsted said on Monday it would proceed with the planned rights issue despite the U.S. order and had the support of the Danish state, which owns 50.1% of the company.
“The planned rights issue had been sized to provide the required strengthening of Orsted’s capital structure to execute its business plan, even when taking into account the impact of this uncertainty on Orsted’s U.S. offshore wind portfolio,“ it said in a statement.
The Trump administration’s Bureau of Ocean Energy Management (BOEM) published its stop-work order late on Friday, forcing suspension of a project that was 80% complete with 45 out of 65 wind turbines installed.
The timing of the halt to Revolution Wind off Rhode Island was particularly damaging for Orsted, which announced earlier this month a plan to raise 60 billion Danish crowns ($9.42 billion) through a rights issue.
“This is a huge hurdle with regards to raising capital,“ Sydbank analyst Jacob Pedersen told Reuters, adding he was “stunned.”
AlphaValue analyst Pierre-Alexandre Ramondenc said the U.S. move could jeopardise the success of the rights issue.
“The news came as a major shock and amounts to nothing less than political hostage-taking by the U.S. administration, given the project’s advanced stage,“ Ramondenc said.
On his first day in office in January, President Donald Trump suspended new offshore wind leasing pending environmental and economic review of projects. He has repeatedly criticised wind energy as ugly, unreliable and expensive.
Orsted’s share price, down 30% since announcing its plan on August 11, now faces further downside risk, the analysts said - REUTERS
