Orsted Slashes Price by 67% in Massive $9.4B Rights Issue to Fund US Projects
Orsted Announces Price for $9.42 Billion Rights Issue, Shares Slide 3.4% in Copenhagen
Investing.com reported on Monday that Orsted A/S, a leading Danish offshore wind developer, has set the price of its massive rights issue at 66.6 Danish crowns ($10.46) per share. This move comes as a significant portion of its $9.42 billion capital raise to support its U.S. projects, particularly the Sunrise Wind project affected by President Donald Trump’s opposition to renewable energy.
According to a company statement, Orsted has secured shareholder backing for the capital increase earlier this month and intends to utilize it to realize the full potential of its business. The Danish offshore wind developer emphasized that the rights issue is essential in addressing the increased funding requirements from the Sunrise Wind project, as well as strengthening its overall financial foundation.
The Right Issue Pricing and Shareholder Participation
Orsted’s rights issue carries a subscription ratio of 15:7, with an astonishing number of new shares (900,816,600) to be issued at 66.60 crowns each. As a result of this move, gross proceeds are expected to reach around 60 billion crowns ($8.47 billion), yielding net proceeds of 59.4 billion crowns after accounting for costs.
Interestingly, in the absence of investor support in the secondary market following Friday’s closing price (200.3 Danish crowns per share), RBC Capital Markets analysts estimated that the theoretical ex-rights price might amount to approximately 109 crowns per share on their calculations. Orsted shares declined by a considerable 3.4% in Copenhagen on Monday at market opening in response to this development.
Potential Benefits and Risks for Orsted Shareholders
Industry analysts suggest that there has been a significant discount beyond the recent sell-off experienced by Orsted, taking into account the $10.46 per-share pricing level. This assertion stems from calculations performed by RBC Capital Markets, which took into consideration closing prices of Friday’s trading.
Moreover, management at Orsted stated in discussions with analysts that approximately DKK 40bn ($5.78) will be dedicated towards funding the Sunrise Wind venture, given its discontinuation due to Trump opposition, and around DKK 20bn ($2.90 billion) earmarked for capital structure strengthening.
This allocation highlights important considerations and strategic aims Orsted has outlined in relation to this substantial financial outlay.
A Breakdown of Key Figures Provided by Analysts
In evaluating the terms surrounding this investment decision, a few key figures offered by the estimates from RBC Capital Markets are useful to consider:
- Closing price on Friday: 200.3 Danish crowns per share
- Estimated theoretical ex-rights price: approximately 109 crowns per share as per their calculations
- Gross proceeds anticipated through rights issue: around 60 billion crowns
- Net proceeds after deducting costs from gross proceeds: expected to be 59.4 billion crowns
These figures offer valuable insight into the magnitude and potential implications of Orsted’s decision on its shareholders.
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