DONG ENERGY

Dong Energy is a majority state-owned electricity and energy company. Some months ago, it was announced that Goldman Sachs and other investors would subscribe for kr.11 billion of new shares in the company. Goldman's share would end up at 19%, while the Danish state's would be reduced from 81% to 60%.

Nothing wrong with that; what has raised eyebrows here are the terms of the deal. Normally, an investor with less than 20% of a company is in a fairly weak position. However, Goldman appears to have secured a veto to changes in the articles of association and who can go on the Board, plus the right to enter new business areas that are outside the political agreement behind the running of Dong, and a commitment for the state to repurchase the shares if the company is not listed on the stockmarket within a specified time period.

This has caused the Danish People's Party to threaten a veto. The DPP is in principle a supporter of private capital. But it is also a party to the political agreement and a fierce opponent of unnecessary taxation (which might occur, if the repurchase option gets exercised). Normally I am not a fan of the DPP, but on this they are right; the agreement should be scrutinised in detail before being approved. After all, Goldman have what the British police would call "form" in this area.  

Walter Blotscher