Goldman Sachs, ATP and PFA to invest DKK 11 billion in Dong Energy

The Danish State represented by the Ministry of Finance and DONG Energy A/S have reached an understanding with funds managed by the Merchant Banking Division of Goldman Sachs (Goldman Sachs) and the Danish pension funds Arbejdsmarkedets Tillægspension (ATP) and PFA Pension Forsikringsaktieselskab (PFA) on the main terms whereby Goldman Sachs, ATP and PFA will invest a total of DKK 11 billion in DONG Energy A/S by subscribing for new shares.

Goldman Sachs will subscribe for new shares for DKK 8 billion, ATP for DKK 2.2 billion and PFA for DKK 0.8 billion. The subscription of new shares will be based on a valuation of DONG Energy A/S of DKK 31.5 billion prior to the capital increase. Goldman Sachs and ATP will be represented on the Board of Directors.

The capital increase is part of DONG Energy's financial action plan announced in February 2013 which included an injection of additional equity of at least DKK 6-8 billion.

Henrik Poulsen, DONG Energy’s CEO, says:
“DONG Energy has an exciting and profitable growth potential. With the
injection of new equity, we have almost fully delivered on our financial action plan and have thus secured the necessary platform for pursuing our ambitions for the coming years.”

“I regard the interest displayed by these three well renowned private investors as a vote of confidence in the company’s potential, our strong market positions and our highly competent employees.”

Andrew Wolff, Head of Goldman Sachs Merchant Banking Division for Europe, Middle East Africa and co-Head of Asia, says:
“DONG Energy is one of the leading energy companies in northern Europe. Henrik Poulsen and his team are world class managers and have set ambitious goals for the company. We believe in this vision and are excited to work with the company and the Danish State to help grow the business and provide environmentally friendly energy and infrastructure for European markets.”

Carsten Stendevad, ATP's CEO, says:
“This is a great deal for ATP members. We see a significant upside potential in DONG Energy and have great confidence in the ability of the executive team to deliver on the business case. ATP looks forward to working actively with DONG Energy and our co-investors on unlocking value.”

Henrik Heideby, PFA’s President and Group CEO, says:
“We are excited to invest in long term energy production and infrastructure assets through this partnership with DONG Energy. The company is undergoing a positive development under a highly competent management team and with its strong position in its markets we see attractive growth opportunities. We believe this is a great opportunity to generate an attractive long term return for the benefit of PFA's customers. The contribution to Denmark's green energy transformation is an added bonus”.

The parties have agreed to a non-binding term sheet outlining the main terms of the investment and will now proceed to finalise the transaction documentation on an exclusive basis. The investment will be conditional upon conclusion of final agreements between the parties. DONG Energy A/S will issue an announcement when final transaction documentation has been concluded.

The agreement will result in the Danish State’s ownership interest in DONG Energy A/S being reduced from approximately 81 to approximately 60 per cent and the total ownership interest of the existing minority shareholders being reduced from approximately 19 to approximately 14 per cent. The ownership interests of the new investors will be as follows: Goldman Sachs approximately 19 per cent, ATP approximately 5 per cent and PFA approximately 2 per cent.

The minority shareholders will be offered to participate in the capital
increase on equal terms with the new investors. If one or more minority
shareholders choses to invest it will affect the distribution of ownership
interests set out above.

The parties agree to seek an initial public offering (IPO) of DONG Energy when conditions are right. If an IPO of DONG Energy has not been completed following the release of the financial statements for the 2017 financial year, the new investors will have the option to sell their shares back to the Danish State on pre-agreed terms.

The transaction will, inter alia, be subject to the following:

— Confirmatory due diligence investigations by the investors;
— Political approval;
— Adoption of the capital increase by the shareholders of DONG Energy A/S;
— Approval by the relevant competition authorities.