By Stine Jacobsen, Jacob Gronholt-Pedersen and Nora Buli
COPENHAGEN (Reuters) -Denmark’s state-controlled offshore wind group Orsted is poised to secure shareholder approval for a $9.4 billion emergency rights issue on Friday.
But the lifeline may only stave off a looming credit downgrade, as risks pile up on its U.S. projects due to President Donald Trump’s opposition to wind power.
Once celebrated as a trailblazer in offshore wind, Orsted now finds itself in dire straits, grappling with industry-wide challenges and the risk of further losses on its two remaining projects off the U.S. East Coast.
The stakes are high for the Danish firm, which has transformed itself from oil producer DONG Energy into a global renewables leader, its market value increasing fivefold between its 2016 IPO and a 2021 peak.
But supply chain disruptions, surging interest rates, project delays, and Trump’s anti-wind policies have battered the offshore wind sector, sending Orsted’s shares tumbling by 85% from their peak.
At the heart of the drama are Orsted’s U.S. projects Sunrise Wind and Revolution Wind, both of which have been thrown into uncertainty.
Two-thirds of the fresh capital is earmarked for Sunrise Wind, a project that saw potential co-investors flee after the Trump administration ordered Equinor to halt a neighboring wind farm in April.
U.S. officials also issued a stop-work order for the nearly completed Revolution Wind facility last month, prompting the joint venture running the project to file a lawsuit against the Trump administration over the decision.
The rights issue is critical for Orsted’s survival and its ability to retain its credit rating.
“We do this to ensure that we can continue to lead the expansion of offshore wind in our core markets here in Europe for the critical years to come,” CEO Rasmus Errboe told reporters at a meeting of EU countries’ energy ministers in Copenhagen on Thursday.
Ratings agency S&P Global warned that the equity raise might only buy the company three to six months of relief from construction delays before facing additional credit pressures.
S&P already downgraded Orsted to BBB- in August, the lowest investment-grade rating. Any further downgrade would push it into junk territory – a label that would impact its ability to finance future projects.
Norwegian state-controlled energy firm Equinor, a 10% shareholder in Orsted, has thrown a lifeline, pledging to inject up to 6 billion crowns ($941.2 million) into the rights issue.
Equinor CFO Torgrim Reitan described the moment as a crucial juncture. “We find it important to be a long-term and supportive investor in a period like this,” Reitan said, hinting at a deeper strategic collaboration between the two companies.
The extraordinary general meeting is scheduled to begin at 0700 GMT in Copenhagen. The rights issue will likely be approved with a two-thirds majority.
($1 = 6.3751 Danish crowns)
(Reporting by Stine Jacobsen and Jacpob Gronholt-Pedersen in Copenhagen and Nora Buli in Oslo; Editing by Jan Harvey)
