Equinor joins Ørsted’s DKr60 bln rights issue, keeps 10% shareholding

Investing.com -- Norway’s Equinor (OL:EQNR) on Monday said it will participate in Ørsted’s planned DKr60 billion rights issue to preserve its 10% ownership in the Danish offshore wind developer. 

The move comes as Ørsted seeks to strengthen its balance sheet after setbacks in the U.S. offshore wind market and political headwinds from Washington.

Equinor confirmed it will subscribe for new shares worth up to DKK 6 billion, about $939 million at a USD/DKK exchange rate of 6.39. 

“Equinor intends to participate in the Rights Issue and maintain its 10% ownership share in Ørsted,” the company said in a statement, describing itself as a “long-term industrial shareholder.” 

It added that it will nominate a candidate for Ørsted’s board ahead of the next annual general meeting.

Ørsted will ask shareholders at an extraordinary general meeting on Friday to approve the capital raise, which the company has tied to what it called “material adverse developments” in the U.S. sector. 

Denmark’s finance ministry has confirmed the state, which owns 50.1% of Ørsted, will also back the rights issue.

Equinor, 67% owned by the Norwegian state, said its support for the issue “reflects confidence in Ørsted’s underlying business, and the competitiveness of offshore wind in the future energy mix, in selected geographies.”

Both companies have faced setbacks in the U.S. market this year. In July, the U.S. Bureau of Ocean Energy Management issued a work-stop order for Ørsted’s $1.5 billion Revolution Wind project, which was 80% complete. 

Earlier in April, the agency halted Equinor’s Empire Wind 1 project off New York. Equinor said it is monitoring the situation in the U.S. “closely” and will remain in dialogue with Ørsted as developments unfold.

“In response to the challenges facing offshore wind, the industry will see consolidation and new business models,” Equinor said. 

“Equinor believes that a closer industrial and strategic collaboration between Ørsted and Equinor can create value for all shareholders in both companies.”

The company said that its participation in the rights issue would remain within its existing financial framework. 

“Equinor will participate in the Rights Issue within its communicated financial framework and remains committed to delivering competitive capital distribution,” it said.

Equinor’s offshore wind portfolio consists of 0.4 GW net installed capacity, with another 3 GW under development. Its current focus is on completing projects in North-West Europe and Empire Wind 1 in the United States.