(Bloomberg) -- Danish wind developer Orsted A/S is facing a steep balance sheet gap even after abandoning some of its offshore wind projects in the US, according to Jefferies International Ltd analysts who cut their recommendation on the company to hold from buy.

Penalties of 15 to 18 billion Danish kroner ($2.2-2.6 billion) that the company will need to pay to exit the projects will leave a funding hole that will challenge the company’s BBB+ credit rating, equity analysts including Ahmed Farman wrote in a note. The company may be forced to cut its dividend to help bridge the gap.

The company, which is the world’s biggest developer of offshore wind parks, is at the center of a crisis for the wind industry with companies struggling to fund large developments. A toxic mix of higher financing and component costs combined with increased competition have slowed the pace of renewable projects around the world, making it harder for developers and suppliers to make new projects profitable. 

To tackle its financial issues, the company has hired Boston Consulting Group. The consultant will help the company to secure its capital structure and credit rating, as well as to improve competitiveness and value creation. BCG declined to comment.

“We would like to see a line drawn under Orsted’s balance sheet issues,” the analysts wrote. “A reduction in FY24-26 dividend could be helpful in bridging their funding gap, which would afford Orsted some earnings protection and reduce execution risk.”

Earlier this week, Chief Executive Officer Mads Nipper dismissed the company’s Chief Financial Officer Daniel Lerup and Chief Operating Officer Richard Hunter, following earnings and sales that trailed estimates for the quarter.

Since Nipper took over in January 2021, shares have slumped more than 70%. Nipper told Bloomberg that he’s offered to resign when it became clear that two offshore projects in the US would need impairments. He said in a September interview that he retains the support of the board despite the plunge in market value. 

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