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Denmark

Denmark

Getting better capitalised

Vestas launched the process for its promised share capital increase last month with a rights issue to existing shareholders aimed at raising EUR 282 million. Shareholders were offered one new share for every three they own at a price of DKK 50, a 45% discount on the DKK 80 at which shares were trading on May 24, the opening day of the rights issue, which closes June 3.

The offer, which follows closely on the heels of Vestas takeover of NEG Micon, was underwritten by Dresdner Kleinwort Wasserstein and Nordea Corporate Finance, joint lead managers of the deal. Should any shareholders decline to exercise their right to expand their shareholding at a favourable price, the two underwriters have a prior agreement with Vestas to buy any shares left on the table at the offer price, "subject to the satisfaction of certain conditions." Short of a total share price collapse, the arrangement assures Vestas that all EUR 282 million it is seeking from the market will be raised. The process ends on June 11.

The capital increase has been criticised by shareholders for primarily benefiting bank lenders at their expense, by reducing Vestas' debt. Vestas' managing director, Svend Sigaard, confirms that some of the money raised will be used to pay off bank loans, although the primary purpose of the move is to strengthen the group's capital base and to make capital investments.

In the 181 page prospectus document published prior to the rights issue, Sigaard maintains the company's predictions for turnover for the year of EUR 2.7-2.8 billion and an earnings margin before interest payments and tax of around 7%. Management also remains confident that it can hit its targeted annual costs savings from the merger of EUR 67 million.

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