FILE PHOTO: General view of the Walney Extension offshore wind farm operated by Orsted off the coast of Blackpool, Britain September 5, 2018. REUTERS/Phil Noble/File Photo
FILE PHOTO: A view of the turbines at Orsted's offshore wind farm near Nysted, Denmark, September 4, 2023. REUTERS/Tom Little/File Photo

By Stine Jacobsen and Jacob Gronholt-Pedersen

COPENHAGEN (Reuters) -Offshore wind developer Orsted won shareholder approval on Friday for a $9.4 billion emergency rights issue to help fund U.S. projects thrown into uncertainty by President Donald Trump's opposition to the renewable energy source.

The stakes are high for the Danish state-controlled firm, which was once celebrated as a trailblazer in offshore wind but is now struggling to stave off a potentially crippling credit rating downgrade.

Orsted, previously an oil producer under the name DONG Energy, transformed itself into a global renewables leader, increasing its market value five-fold between its 2016 IPO and 2021.

But supply chain disruptions, surging interest rates, project delays, and Trump's anti-wind policies have battered the offshore wind sector, sending Orsted's share price tumbling by 85% from that 2021 peak.

At the heart of the current drama are Orsted’s U.S. projects Sunrise Wind and Revolution Wind.

Two-thirds of the new capital is earmarked for Sunrise Wind, a project that saw potential co-investors flee after the White House ordered Norway's Equinor to halt a neighbouring wind farm in April.

Last month, U.S. officials also issued a stop-work order for the nearly completed Revolution Wind facility, prompting the joint venture running the project to sue the administration.

Orsted CEO Rasmus Errboe told Reuters the company is incurring weekly costs of nearly 100 million Danish crowns ($15.7 million) for its 50% stake in Revolution Wind, co-owned with Skyborn Renewables.

"We have extensive dialogue with all stakeholders in Washington and at the state level," CEO Rasmus Errboe told Reuters.

He warned that costs could rise significantly by October if specialised vessels contracted to install the remaining substation and cables are no longer available within their contracted period, forcing Orsted to re-enter the market at potentially much higher rates.

The stop-work order has also driven up costs for Sunrise Wind by 60 million to 70 million crowns per week, as Orsted uses the same vessel to install turbines for both projects.

Adding to Orsted's troubles, low wind speeds in July and August and a delay to a project under construction off Taiwan prompted it to cut its 2025 operating profit outlook on Friday.

The rights issue is critical for Orsted's survival and its ability to avoid a further credit downgrade.

Ratings agency S&P Global, however, warned that the equity raise might only buy the company three to six months of relief before construction delays trigger renewed pressure.

"It's going to be a long, tough journey to reerect Orsted," company chair Lene Skole told shareholders.

S&P already downgraded Orsted to BBB-, the lowest investment-grade rating, in August. Any further downgrade would push it into junk territory, complicating future financing.

Norwegian energy firm Equinor, a 10% shareholder in Orsted, said it would invest up to 6 billion crowns ($941.2 million) into the rights issue.

($1 = 6.3751 Danish crowns)

(Reporting by Stine Jacobsen and Jacob Gronholt-Pedersen in Copenhagen and Nora Buli in Oslo; additional reporting by Kate Abnett, editing by Jan Harvey and Joe Bavier)