The U.S. government halts wind power projects, causing a sharp decline in the stock price of wind power giant Ørsted

The unexpected decision by the U.S. government has forced Danish wind power giant Orsted to halt a nearly completed offshore wind project, not only causing its stock price to plummet to a historic low but also putting its key financing plans under severe strain.

Orsted's stock price quickly fell after the market opened on Monday, with a decline of about 17% at one point. This followed the U.S. Bureau of Ocean Energy Management issuing a stop-work order on Friday evening for its "Revolution Wind Project" located near Rhode Island.

According to Orsted, the project is 80% complete, with 45 out of 65 wind turbines already installed. The company stated that it will comply with the U.S. order and is exploring solutions to resume the project.

This sudden ban comes at a critical time when Orsted is attempting to raise urgently needed funds through large-scale financing. Analysts point out that this brings significant uncertainty to the company's financing prospects, leaving investors deeply concerned.

Sudden Ban Casts Shadow Over Orsted's Financing Plans

The stop-work order issued by the U.S. Bureau of Ocean Energy Management on Friday evening directly led to a fierce sell-off of Orsted's shares after the market opened on Monday. The company's stock price plummeted by about 17% at one point, hitting a historic low. The halted "Revolution Wind Project" is a key part of Orsted's strategy in the U.S., currently in the later stages of construction, with 45 out of the planned 65 turbines already installed.

This stop-work order adds new variables to Orsted's financial situation. Earlier this month, the company had just announced a share issuance plan of up to 60 billion Danish kroner (approximately 9.4 billion USD) aimed at raising the necessary funds for development.

Jacob Pedersen, head of equity research at Sydbank, noted in a report on Monday that the potential financial consequences of the stop-work order have raised market concerns about Orsted's ability to smoothly advance its financing plans. He stated that the best-case scenario is that "the financial consequences of the halt will only be the ongoing costs associated with the project delay."

However, Pedersen added that the worst-case scenario is that the "Revolution Wind Project" will never be able to supply power to the U.S. He warned:

"At that point, Orsted would face asset write-downs in the tens of billions (Danish kroner) and significant additional costs due to contract exits. This would almost certainly push financing needs far beyond the 60 billion Danish kroner level."

Orsted Insists on Pursuing Financing, Claims Support from Major Shareholder

In the face of market turmoil, Orsted confirmed on Monday that it will continue to pursue its share issuance proposal, noting that the plan has received support from its majority shareholder, the Danish government.

The company stated that while complying with the stop-work order, it is actively assessing various options to resolve the issues and strive to resume construction. Pedersen believes that Orsted's insistence on maintaining the original financing scale indicates that the company does not expect the worst outcome, "but this also does not guarantee that the final result will be as desired." Risk Warning and Disclaimer

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