December 19 (Renewables Now) - Ørsted A/S (CPH:ORSTED) said Wednesday it has agreed to offload its liquefied natural gas (LNG) business to British-Swiss natural resources company Glencore PLC (LON:GLEN) in view of the Danish energy group's strengthening focus on renewables.
Ørsted has been expanding its presence in renewable energy around the world so its future core business will not include LNG trading, which is the reason for the divestment, according to the statement.
The LNG business has been loss-making in the past years and is expected to remain in the red unless it secures more contracts, Ørsted said.
The deal includes a payment from Ørsted to Glencore, which will lead to a loss bigger than the company's current provision related to the business and as a result the provision for 2019 will be increased. The deal is expected to affect earnings before interest, tax, depreciation and amortisation (EBITDA) positively from 2020 onwards. EBITDA forecast for this year remains unaffected, within the DKK 16 billion (USD 2.4m/EUR 2.2m) - DKK 17 billion range.
The sale is expected to close in the summer of 2020, subject to meeting a number of conditions.
(DKK 10.0 = USD 1.479/EUR 1.344)