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Goldman Sachs Buys $1.46 Billion Stake in Denmark’s Dong Energy

The London Array Project
A boat passes between wind turbines at the London Array project, the world's largest consented wind farm, a partnership between Dong Energy A/S, E.ON AG and Abu Dhabi-based Masdar in the Thames Estuary, U.K. Photographer: Chris Ratcliffe/Bloomberg

Goldman Sachs Group Inc. will buy an 8 billion-krone ($1.46 billion) stake in Dong Energy A/S, Denmark’s largest utility, which is shoring up its balance sheet after losing money on failed natural gas bets.

The purchase will give New York-based Goldman a 19 percent stake in Dong, which is controlled by the government, the utility said late yesterday. Danish pension funds ATP and PFA will pay 2.2 billion kroner and 800 million kroner to buy stakes of about 5 percent and 2 percent, respectively.

Denmark’s government, which pulled a planned initial public offering of Dong in 2008, said in February it will sell a stake in the Skaerbaek, Denmark-based company as writedowns soared. Dong yesterday said the parties have agreed to seek an initial public offering when conditions “are right.”

The new investors have an option to sell their holdings back to the government should an IPO not be completed before the release of Dong’s 2017 financial report, according to today’s statement.

Goldman plans to “grow the business and provide environmentally friendly energy and infrastructure for European markets,” Andrew Wolff, head of Goldman Sachs Merchant Banking Division in Europe, said in the statement. Goldman is buying the stake via funds managed by Wolff's division.

Dong is the world’s largest operator of offshore wind turbine parks. The company also explores for oil and natural gas in the North Sea.

Yields Fall

The yield on Dong’s 6.25 percent bond due 3013 declined to 6.07 percent in the Danish capital yesterday, the lowest since the bond started trading on June 24. The bond yielded about 6.10 percent on Oct. 1, according to Composite Bloomberg Bond Trader prices.

The sale will reduce the government’s stake to about 60 percent from 81 percent, according to the statement.

Dong is selling shares as part of a financial restructuring announced in February to cut costs, reduce debt and bolster investments in oil and gas exploration as well as wind farms. The plan includes cutting costs by 20 percent and selling assets to raise 10 billion kroner.

“With the injection of new equity, we have almost fully delivered on our financial action plan and have thus secured the necessary platform for pursuing our ambitions for the coming years,” Dong Chief Executive Officer Henrik Poulsen said in the statement.

Dong said in April the company is being advised by Nordea Bank AB and Morgan Stanley.

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