Equinor set to acquire a 10% stake in Ørsted's share offer, securing role as major shareholder

Ørsted, a leading renewable energy company, has announced plans for a rights issue to fund the construction of its Sunrise Wind offshore wind farm in the United States. The Danish state, Ørsted's majority shareholder, has committed to subscribing to its share (50.1%) of the company in the rights issue. However, the remaining 49.9% will be jointly underwritten by a syndicate of banks, including Danske Bank, J.P. Morgan, Morgan Stanley, Nordea, and SEB.

The decision comes amidst regulatory uncertainty in the US offshore wind industry. Earlier this year, Equinor faced a similar challenge with its Empire Wind 1 project, which was halted by the US federal government for further review just as offshore work was ramping up. The order for Empire Wind 1 was rescinded around a month after it was issued, following discussions between the New York Governor and the White House. The stop-work order for Revolution Wind, another Ørsted project, has added to this uncertainty.

Equinor, which acquired a 10% stake in Ørsted in December 2020, believes that a closer industrial and strategic collaboration between the two companies can create value for all shareholders. As a show of support, Equinor plans to participate in Ørsted's upcoming rights issue, worth around EUR 8 billion. Equinor intends to subscribe for new shares at a consideration of up to DKK 6 billion (around USD 939 million or EUR 800 million).

The proceeds from the rights issue will not only fund the construction of the Sunrise Wind farm but also provide financial flexibility for Ørsted to execute its business plan, including projects in the uncertain US market. The offshore wind industry in the US may undergo consolidation and new business models due to the challenges it is facing.

Equinor will nominate a candidate to Ørsted's board of directors ahead of the next annual general meeting. The company will remain in dialogue with Ørsted as the situation evolves and is following recent developments around the offshore wind industry in the US closely.

Ørsted announced the plans for the rights issue with pre-emptive rights for existing shareholders on 11 August. Building Sunrise Wind to completion entirely on its balance sheet requires approximately DKK 40 billion (around EUR 5.4 billion). The rights issue has been sized to provide the required strengthening of Ørsted's capital structure to execute its business plan, considering the impact of this uncertainty on its US portfolio.

The US offshore wind industry, with its regulatory challenges and potential for consolidation, presents both opportunities and risks. The collaboration between Equinor and Ørsted could be a step towards navigating these complexities and capitalising on the opportunities that lie ahead.