Vestas Sells Bonds for First Time as Growth Slows

By Christian Wienberg
March 15 (Bloomberg) -- Vestas Wind Systems A/S, the biggest maker of wind turbines, is selling bonds for the first time to diversify funding as growth in the market slows.
The company successfully placed a 600 million-euro five- year bond offering paying a coupon of 4.625 percent, it said in a statement today. The offer, which goes on issue on March 23, corresponds to a yield of 225 basis points more than the benchmark mid-swap rate, the company said.
Revenue growth at Vestas slowed after the credit crisis prompted banks to restrict lending to wind park developers, causing project cancellations and delays. Last month, Vestas cut its sales and profit margin forecasts for 2010 and said it would investigate the possibility of a bond sale.
“There have been some investors fearing Vestas would raise capital by selling shares again and that risk is now reduced,” Jacob Pedersen, an analyst with Aabenraa, Denmark-based Sydbank A/S with an “overweight” rating on the stock, said by phone.
Vestas turned to the bond market after increasing cash at a faster pace than financial debt because it raised 5.98 billion kroner ($1.1 billion) in an April share sale, according to data compiled by Bloomberg.
The company more than tripled its liquidity to 488 million euros by the end of 2009 compared with a less-than-threefold gain in financial debt to 351 million euros from 123 million a year earlier, according to the annual report.
Sales Outlook
The market has “persistent” oversupply that will depress turbine prices to an average 1.08 million euros per megawatt in the first half of 2011 from 1.24 million euros in the second half of 2008, according to Bloomberg New Energy Finance.
China, the world’s third-biggest wind-power market by generating capacity, is idling as much as 40 percent of its turbine factories, Lu Yachen, vice president of Shanghai Electric Group Corp, said March 11. That followed a surge in the number of Chinese turbine makers to 78 from six in 2004.
After growing by 30 percent to 40 percent a year from 2004 to 2008, the global market for the turbines probably grew a little more than 8 percent last year and may expand about 10 percent in 2010, according to Danish researcher BTM Consult APS.
Deutsche Bank AG cut its rating today on Vestas to “sell” from “hold,” saying Vestas faces profit margin “pressure” and earnings forecasts downgrades.
Vestas fell 7.8 kroner, or 2.9 percent, to 263.6 kroner in Copenhagen trading. The shares have lost 17 percent this year compared with an 11 percent drop in the WilderHill New Energy Global Innovation Index and a 1.3 percent gain in the Bloomberg European 500 Index.
‘Attractive Pricing’
“We see the eurobond market as an attractive source of financing as it offers long-term visibility and attractive pricing,” Chief Financial Officer Henrik Noerremark said in a separate filing.
Nordea Bank AB, Rabobank Nederland NV, Societe Generale SA and UniCredit SpA are the joint lead managers and book-runners, Vestas said. SEB AB will also be joint lead manager, though not a book-runner for the bond sale.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net