Rift with turbine manufacturer threatens wind-farm developer
Wind-farm developer New Zealand Windfarms may need to raise more than $30 million to complete its Te Rere Hau project near Palmerston North while its separate rift with turbine manufacturer Windflow Technology deepens over disputed payments.
The pair are at loggerheads over unconditional orders Windfarms placed in September last year for 32 turbines from Windflow, for completion of its 65- turbine Te Rere Hau project.
Windfarms has since disputed it has a contractual right to withhold payments – more than $3.5 million.
Yesterday, the New Zealand Stock Exchange suspended trading in Windflow’s shares as it had not provided the NZX with its annual report for the year ending June 30, which was due on October 30.
In mid-September, Windflow reported a $1.23 million loss, with $11.7 million in cash deposits and no long-term debt.
In June, state-owned enterprise Mighty River Power took a 19.8% stake for $7.1 million in Windflow.
Windflow was originally the parent company and spun off Windfarms in October 2005, raising $8.8 million.
Craigs Investment Partners broker Peter McIntyre said the business case for Windfarms had “changed dramatically” since its last capital raising of $73.5 million in 2007.
Problems were environmental, technology related and with management.
“It’s disappointing that just as the economy really needs these two types of companies to take off and perform, they’re not.”
Each of the two-bladed Windflow turbines is 30m high, with a rotor diameter of 33m, and can potentially produce enough electricity to power up to 200 households a year.
“The companies were co-dependent and if they continue on the current path it could lead to negative outcomes for both of them,” Mr McIntyre said.
He estimated the cost of the 32 turbines and infrastructure spend required would exceed the $10.5 million cash held by Windfarms, at June this year, by more than $30 million.
Windfarms needed a $32 million equity injection to complete Te Rere Hau.
Mr McIntyre “expected” Windfarms would be considering a rights issue of around 20c per share on a 2:1 basis to raise capital.
The spat and non-payments between Windfarms and Windflow was over certification of the 32 turbines.
Windfarms claimed they did not meet European certification standards, a claim rejected by Windflow and which could yet end up in the High Court.
Mr McIntyre said other concerns for Windfarms included above-average rainfall during winter which had seen wholesale electricity prices drop 20% below median prices during the past five years, “problematic” turbine technology and the two companies’ dispute which had brought the Te Rere Hau project “to a standstill”.
“The dispute has progressed to a point where Windflow will now potentially initiate a legal process to recover the amounts owing unless Windfarms makes the required payment,” Mr McIntyre said.
By Simon Hartley
Otago Daily Times
10 November 2009
Tags: Wind power, Wind energy
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