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Cold breath of lawsuits

Wind power company Infigen has been hit with $US51 million of lawsuits in the US by a wind turbine manufacturer that is denying any liability for equipment following a storm and subsequent power outages.

The news sliced more than 10 per cent off Infigen’s share price yesterday, as investors cut positions after its recent gains against the backdrop of a weaker market overall.

The legal action with turbine manufacturer Gamesa Wind US, is spread across five wind turbine projects Infigen manages in North America.

In all the cases, the litigation follows claims by Infigen over either warranty complaints or quality complaints over the turbines received from Gamesa.

The principal claims surround the Kumeyaay wind farm in California, which was hit in late 2009 by a storm and subsequent power outage.

Infigen said yesterday that following lengthy disputes between the two parties, Gamesa had lodged claims totalling $US34.5 million with Kumeyaay.

If it is not successful in the claim against Gamesa, Infigen said it would pursue claims with its insurer for the cost of any non-warranty repairs and the lost production.

”Despite numerous attempts, including participation in formal mediation, Kumeyaay and Gamesa have been unable to resolve this warranty matter to date,” Infigen told the ASX yesterday.

Additional claims totalling $US16.6 million involve turbines supplied for the Allegheny, GSG, Bear Creek and Mendota Hills wind farms.

The deepening dispute between the two parties comes as Infigen’s share price had pulled out of its recent decline.

It had rallied to 30¢, although yesterday’s news pushed down the shares to close at 26.5¢, just off the day’s low of 26.2¢.

Other alternative energy groups were also weak, with Dart Energy hitting a new low of 39¢, down 3¢, and Metgasco slipping 1.5¢ to 38.5¢.