Shares in Orsted A/S stock fell as much as 19 percent to a record low after US President Donald Trump’s administration blocked construction of an almost-finished offshore wind farm, throwing a wrench into a planned 60 billion kroner (US$9.4 billion) share sale backed by the Danish government.
The Danish wind company’s management is meeting with investors and advisers in London today to reassure them that a growing crisis is under control and that the planned rights issue will go ahead. Orsted has yet to formally launch or price the offering and is being advised by banks including JPMorgan Chase & Co and Morgan Stanley.
Orsted declined as much as 19 percent in Copenhagen yesterday. Shares are down almost 50 percent this year, wiping nearly US$8 billion off the company’s value.
Photo: Nichlas Pollier, Bloomberg
The events mark the latest push by the Trump administration to halt the expansion of offshore wind farms, an energy source that the US president personally dislikes. Those efforts have included stopping new leases on sites and permits for new offshore wind farms and rolling back tax credits that support projects.
“We expect all of this to create a more challenging setup for the upcoming rights issue regarding issue price and investor demand,” Jefferies International Ltd analyst Ahmed Farman said in a note.
Friday’s stop-work order is for Revolution Wind off the coast of Rhode Island — a project that’s costing US$4 billion to build, according to an estimate by Jefferies. It’s the latest in a string of bad news for Orsted that led to its credit rating being cut to the lowest investment grade.
Investors want to know whether the company can find an agreement to appease the government and how long that could take, or if it will be forced to abandon the project and how much it would cost. The uncertainty could damage investor interest in the rights issue or mean the Danish government needs to increase its stake in the company even further.
The company tried to reassure investors yesterday that plans are going ahead.
“The planned rights issue has 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 US offshore wind portfolio,” the company said in a statement.
The Danish government, which owns 50.1 percent of Orsted, still plans to take part in the capital raise, saying it had accounted for the risk when deciding on the matter.
“I can confirm the state’s continued backing,” Danish Finance Minister Nicolai Wammen said in an e-mailed statement yesterday, just as opposition parties resumed calls for the government to sell its stake.
It would be the biggest share sale for the European energy sector in over a decade, with the government planning to buy about half of the securities.
For Orsted, one of the world’s largest offshore wind developers, the order marks a new low point in the company’s failed effort to replicate its European business in the American market. In recent years, a variety of issues including costly supply chain bottlenecks have forced the company to cancel two major projects, issue a series of writedowns and led to the replacement of its top executives.
“Orsted is evaluating all options to resolve the matter expeditiously in dialogue with permitting agencies and potentially through legal proceedings, with the aim being to proceed as quickly as possible,” the company said.
NO BREAKTHROUGH? More substantial ‘deliverables,’ such as tariff reductions, would likely be saved for a meeting between Trump and Xi later this year, a trade expert said China launched two probes targeting the US semiconductor sector on Saturday ahead of talks between the two nations in Spain this week on trade, national security and the ownership of social media platform TikTok. China’s Ministry of Commerce announced an anti-dumping investigation into certain analog integrated circuits (ICs) imported from the US. The investigation is to target some commodity interface ICs and gate driver ICs, which are commonly made by US companies such as Texas Instruments Inc and ON Semiconductor Corp. The ministry also announced an anti-discrimination probe into US measures against China’s chip sector. US measures such as export curbs and tariffs
The US on Friday penalized two Chinese firms that acquired US chipmaking equipment for China’s top chipmaker, Semiconductor Manufacturing International Corp (SMIC, 中芯國際), including them among 32 entities that were added to the US Department of Commerce’s restricted trade list, a US government posting showed. Twenty-three of the 32 are in China. GMC Semiconductor Technology (Wuxi) Co (吉姆西半導體科技) and Jicun Semiconductor Technology (Shanghai) Co (吉存半導體科技) were placed on the list, formally known as the Entity List, for acquiring equipment for SMIC Northern Integrated Circuit Manufacturing (Beijing) Corp (中芯北方積體電路) and Semiconductor Manufacturing International (Beijing) Corp (中芯北京), the US Federal Register posting said. The
READY TO HELP: Should TSMC require assistance, the government would fully cooperate in helping to speed up the establishment of the Chiayi plant, an official said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said its investment plans in Taiwan are “unchanged” amid speculation that the chipmaker might have suspended construction work on its second chip packaging plant in Chiayi County and plans to move equipment arranged for the plant to the US. The Chinese-language Economic Daily News reported earlier yesterday that TSMC had halted the construction of the chip packaging plant, which was scheduled to be completed next year and begin mass production in 2028. TSMC did not directly address whether construction of the plant had halted, but said its investment plans in Taiwan remain “unchanged.” The chipmaker started
MORTGAGE WORRIES: About 34% of respondents to a survey said they would approach multiple lenders to pay for a home, while 29.2% said they would ask family for help New housing projects in Taiwan’s six special municipalities, as well as Hsinchu city and county, are projected to total NT$710.65 billion (US$23.61 billion) in the upcoming fall sales season, a record 30 percent decrease from a year earlier, as tighter mortgage rules prompt developers to pull back, property listing platform 591.com (591新建案) said yesterday. The number of projects has also fallen to 312, a more than 20 percent decrease year-on-year, underscoring weakening sentiment and momentum amid lingering policy and financing headwinds. New Taipei City and Taoyuan bucked the downturn in project value, while Taipei, Hsinchu city and county, Taichung, Tainan and Kaohsiung
RSS