Ørsted to divest 50% stake in Hornsea 3 offshore windfarm to Apollo

In a statement, the company said the transaction is a key milestone in Ørsted’s funding plan and balances the key objectives for partnerships and divestments with an emphasis on capital management.

Subject to customary regulatory approvals, the transaction is expected to close before the end of the year and supports a further strengthening of Ørsted’s capital structure, ensures significant progress on its partnership and divestment programme, and is designed to help it avoid a potentially damaging credit ratings downgrade.

The transaction covers the acquisition of a 50% equity ownership share and the commitment from Apollo to fund 50% of the payments under the EPC contract for the windfarm and the offshore transmission asset. The total value of the transaction is approximately DKK39Bn, and the total project investment remains in the range of DKK70-75Bn. 

Approximately DKK20Bn of the total transaction value will be paid upon closing of the transaction, which is split between a share purchase agreement price of approximately DKK10Bn, covering both the generation and transmission assets, and an initial payment under the construction agreement of approximately DKK10Bn. The remaining amount is expected to be paid under the construction agreement upon achievement of certain construction milestones. The upfront, non-cash EBITDA effect of the transaction is in line with the expectations outlined in the prospectus of the company’s recently completed rights issue, and the expected aggregate lifetime EBITDA effect remains neutral.

As part of the agreement, Ørsted will construct the Hornsea 3 project under a full-scope EPC contract as well as provide long-term operations and maintenance (O&M) services from its East Coast O&M hub. Furthermore, Ørsted will provide the incoming partner with balancing services and a long-term route to market for the renewable electricity generated from Hornsea 3.

Ørsted chief financial officer Trond Westlie said, “We are pleased to welcome Apollo as a partner for Hornsea 3, as they bring infrastructure expertise and scaled capital. 

“We look forward to working with them to deliver this important project that will produce enough electricity to power more than 3 million UK homes once completed and contribute to the renewable transformation of the UK. The divestment represents an important milestone for Ørsted as we continue to deliver on our partnership and divestment programme, which is a cornerstone of our business plan.”

Hornsea 3 is located 160 km off the Yorkshire coast in northern England. When the windfarm comes online, Ørsted’s Hornsea zone – comprising Hornsea 1, 2, and 3 – will have a total capacity of more than 5 GW, making it the world’s largest operating offshore wind zone.