'Just a disaster': Orsted shares plummet to lows after project halt in US

Quotes of the Danish Orsted collapsed to a record low after the administration of U.S. President Donald Trump banned the construction of a nearly completed wind farm off the Atlantic coast. The situation for the world's largest operator of wind farms is complicated by the fact that the company is preparing a large-scale placement of shares and uncertainty with the key project puts the success of the additional issue in question.

Orsted shares fell 19% to a historic low of 173.4 Danish kroner ($27.15) per share at the opening of trading in Copenhagen. Investors were shocked by the White House's order - on August 22, Washington ordered to stop construction of the $1.5 billion Revolution Wind wind farm. By the time of the shutdown, Orsted had already managed to implement the project by 80%, the Financial Times reports.

Orsted's capitalization has collapsed by almost 90% since its peak in 2021. In addition, a series of bad news led to a downgrade of the Danish company's credit rating to the lowest investment grade, Bloomberg notes.

The ban on completion of the nearly completed power plant puts Orsted in a difficult position: just two weeks ago, the company announced plans to conduct a 60 billion kronor ($9.4 billion) subscription offering, the largest for the European energy sector in more than 10 years. On August 26, Orsted executives are meeting with investors and advisers in London to reassure them that the worsening crisis is under control and that the planned offering will go ahead.

"It's just a disaster. It is doubtful that the company will be able to do an additional share issue with the uncertainty hanging over it," Sydbank analyst Jakob Pedersen told the FT.

Investors want to know whether Orsted has a chance to reach an agreement with the Trump administration and how long it may take, or whether it will have to abandon the project and what its losses will be in this case, Bloomberg reports. The uncertainty may weaken investor interest in the offering, the agency emphasizes.

Even a delay in Revolution Wind could "delay Orsted's planned equity capital raise, as well as alter its potential size depending on the magnitude of the incremental costs associated with such a delay and the financial reserve already pledged," the Citi analysts warned.

Until recently, investors were more concerned about another US project, Sunrise Wind, which is 100% owned by Orsted (Orsted owns 50% of Revolution Wind and BlackRock owns the remaining 50%). The forthcoming additional share issue was largely intended to enable the company to finance the investment of around DKK40bn needed to complete the project, the FT reports.

Earlier this year, the Trump administration halted a wind power project by Norway's Equinor but then relented, costing the oil and gas group about $800 million, according to analysts. However, Norway has much better diplomatic relations with the U.S. than Denmark, thanks to ties to Trump by Finance Minister Jens Stoltenberg, formerly head of NATO. Denmark's relations with Trump, on the other hand, remain cool after the US president has repeatedly stated his desire to gain control of Greenland. In addition, the Danish foreign minister recently signed a partnership agreement with California Governor Gavin Newsom, who has proclaimed himself a leader of the resistance to Trump, the FT notes.

This article was AI-translated and verified by a human editor