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Ørsted plans to launch a rights issue with pre-emptive rights for existing shareholders to raise DKK 60 billion (around EUR 8 billion) in gross proceeds, most of which will go to funding the construction of the Sunrise Wind offshore wind project in the US, which the company cannot partially divest at this time as per its usual business model. The Danish state, Ørsted’s majority shareholder, has committed to subscribe for its 50.1 per cent pro rata share of the planned rights issue.
According to Bloomberg , Ørsted’s shares dropped 29 per cent after the company announced the proposed rights issue on 11 August.
“Following the recent material adverse development in the US offshore wind market, it is not possible for Ørsted to complete the planned partial divestment and associated non-recourse project financing of its Sunrise Wind offshore wind project on terms which would provide the required strengthening of Ørsted’s capital structure in order to support the company’s investment programme and business plan”, the company said.
Without the partial divestment of Sunrise Wind and the associated project financing, Ørsted needs to fund the construction of the entire 924 MW offshore wind project on its balance sheet, which requires an incremental funding of approximately DKK 40 billion (around EUR 5.4 billion), according to the developer.
The remainder will be used “to support a robust capital structure” , including providing financial flexibility for Ørsted’s future investments.
To raise new equity capital of DKK 60 billion in gross proceeds via the rights issue, Ørsted will give its existing shareholders a pre-emptive right to subscribe for their respective pro rata share of the capital increase and thereby retain the same relative ownership they hold now.