January 14, 2019 / 4:45 PM / 3 days ago

Energy group Orsted halts power business divestment

COPENHAGEN (Reuters) - Energy group Orsted (ORSTED.CO) said Monday it would halt the sale process of its Danish power distribution business after it became clear there was no longer political support for a divestment.

Orsted, 50.1 percent owned by the Danish state, said on Sunday the finance ministry had told it there was no longer political support for continuing the divestment of its power distribution and residential customer businesses.

“Consequently, Orsted’s board of directors has decided to discontinue the process,” the company said in a statement on Monday.

Orsted was counting on the divestment proceeds to help fund its massive capital expenditure plan of 200 billion Danish crowns ($30.75 billion) to 2025.

A sale of the company’s power distribution business was blocked by opposition parties including the country’s biggest, the Social Democrats.

“It’s not a question about whether it should be sold or not. It is a question about who it should be sold to,” head of the Social Democrats, Mette Frederiksen, said on Monday.

“It’s important that we keep critical infrastructure including the power network in hands where we keep democratic control with what happens. This can be either consumer led ownership or that the state owns no less than half of the company,” Frederiksen said.

Orsted, formerly DONG Energy, listed in Copenhagen in 2016, when the Danish state and a consortium of investors led by Goldman Sachs (GS.N) sold shares.

The sale meant the Wall Street bank doubled an 8 billion- crown investment made just two and a half years earlier, fuelling criticism in Denmark that the previous government sold an 18 percent stake to the Goldman consortium too cheaply.

Denmark will hold parliamentary elections in the first half of the year.

Orsted said it would look at other options for exiting the domestic power business, which it doesn’t see as core as it seeks to expand into renewable energy.

“The ongoing work of separating the said businesses into an independent company will continue,” Orsted said.

Italy’s Enel (ENEI.MI) and Denmark’s SEAS-NVE were among at least four bidders for the unit which was seen to be worth about 2.5 billion euros ($2.9 billion), Reuters reported on Friday.

Reporting by Jacob Gronholt-Pedersen; editing by David Evans

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