Vestas Yield Falls as Bondholders Welcome Sale: Copenhagen MoverChristian Wienberg
The yield on Vestas Wind Systems A/S’s bond fell, matching the lowest level in more than two years in Copenhagen trading after the Danish turbine maker sold its machining and casting unit.
The yield on Vestas’s 600 million-euro ($810 million) 4.625 percent bond due 2015 dropped 22 basis points to 4.84 percent at 10:57 a.m. today. That matched the level on Oct. 7, which was the lowest since May 2011, according to Composite Bloomberg Bond Trader prices.
Bondholders saw the value of their investment grow as shareholders lost as much as 4.6 percent on news that Vestas agreed to sell the units, which employ 1,000 workers, to save 30 million euros over the next two years. Vestas will take a 50 million-euro writedown on the sale which will be conducted at a price of 1 euro plus as much as 25 million euros depending on the units’ future performance. Nordea Markets said that while share investors may be disappointed with the sales price and the writedowns, the cost cuts will overall be beneficial for the Aarhus, Denmark-based company.
“The divestment is part of the plan to improve its capacity utilization and to become a more asset-light and scalable company,” Patrik Setterberg, an equity analyst at Nordea, said in a note to clients today. “We consider the move positive, even though the sales price is lower than expected. We see a risk of the market focusing on the writedown, which will thus cause a negative share price reaction.”