By Dow Jones Business News,
January 30, 2014, 09:14:00 AM EDT
By Clemens Bomsdorf
COPENHAGEN--The stability of the Danish government was put to the test on Thursday after a coalition partner quit
following a dispute over the country's planned sale of a stake in Dong Energy A/S to Goldman Sachs Group Inc.
Prime Minister Helle Thorning-Schmidt said her government would stay in office after the Socialist People's Party,
or SF, withdrew from the three-member minority government, saying internal opposition to the Dong deal was "too strong"
The Danish parliament's finance committee gave the Dong deal the green light later Thursday, as had been expected.
The deal was initially agreed on in November, but has been strongly criticized in several circles over recent weeks.
The government plans to reduce its stake in energy utility Dong to 60% through a rights issue, allowing Goldman
Sachs to buy a 19% share in the company.
Ms. Thorning-Schmidt said at a news conference that the government's policies were effective and would remain in
place, adding that her government will continue to work with the SF.
"I expect a close and trusting cooperation with SF," said the prime minister, adding that a reshuffle of the
government would take place shortly.
Ms. Thorning-Schmidt now has to find new ministers for the six departments that were headed by SF members, among
them the ministries of foreign affairs and taxation.
The reshuffle comes shortly after a cabinet reshuffle in December. Then she had to replace the ministers for
justice and development, who resigned after political scandals, and the foreign minister, who left for health reasons.
SF's withdrawal from the coalition sparked fears that the government could collapse, but that prospect appeared to
Kasper Moller Hansen, a political scientist at University of Copenhagen, said there was no reason to believe that
the government would fall apart.
"It has the support of two left parties that are not in the government. If they were to let the government fall,
new elections would bring the conservatives to power and leave the left without any influence," he added.
Opposition to the Dong deal stems from Goldman Sachs' plan to transfer ownership of Dong to Luxembourg and the
Cayman Islands as well as Delaware--places known for being tax havens.
An online petition demanding a stop to the deal received more than 170,000 signatures, but the petition isn't
Critics of the agreement also note that the investment bank secured itself certain minority rights such as a veto
when it comes to changes in top management. Also criticized was a put option allowing Goldman Sachs and the other new
shareholders to sell back their shares if an IPO doesn't take place by spring 2018.
A listing of the company had been planned in 2008, but was canceled because of uncertain market conditions.
Write to Clemens Bomsdorf at email@example.com
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