A Dartmouth wind turbine maker that’s more than $4 million in debt also had trouble with some of its products.
Seaforth Energy Inc. installed 14 wind turbines in Nova Scotia, all of which carry a five-year warranty.
“The company has been notified of warranty issues for several of the units,” states a document filed with Industry Canada as part of Seaforth’s request for creditor protection.
A projected cash flow report submitted by Michael Morris, president and CEO of the Woodside company, indicates unspecified “warranty work” was expected to cost the company $36,238 in July.
Morris could not be reached Tuesday afternoon or Wednesday morning for clarification, but two Nova Scotia buyers said there had been an issue with the turbine’s generator bolts.
“They came with a coat of paint where the blades would fasten on … and as a result of the paint being there, it changed the tension on the bolts,” David Stevenson, president of Colchester-Cumberland Wind Field Inc., said in an interview Wednesday.
“So we had to take the blades off and clean that paint off.”
The problem was discovered sometime in the winter, but the wind field company decided to put off repairs until the tough weather conditions passed.
It was, Stevenson said, “one of those winters that defied prediction” and affected a number of wind field operators.
That meant the two Seaforth-built AOC 15-50 turbines, which went into operation in March 2013, were shut down for about three months until spring when, he said, the bolt issue was fixed and Seaforth did a series of modifications to the turbines that improved performance.
He said he didn’t know how much the shutdown, caused by both the bolt issue and the weather, hurt the company’s bottom line.
“It certainly was a cost,” Stevenson said.
“It was a loss of production but it was a decision not to try to produce when the conditions may have caused more harm. So prudence in this case plays in our favour even though it required that we miss some production.”
Vernon Pitts, warden for the Municipality of Guysborough, said Wednesday that Seaforth replaced the bolts on its five turbines as a precaution.
“They did replace the bolts because that could’ve been a problem down the road even though we didn’t experience it,” he said.
Pitts said he wasn’t aware of any warranty issues in relation to the turbines, but said some of the municipality’s turbines were “down for a little over a month” earlier this year.
“We had a problem with servicing a while back and that was Seaforth when they were going through a period of flux or whatever you want to call it,” he said.
Since then, Endurance Wind Power Inc. has taken over servicing, he said.
The Surrey, B.C., company is in negotiations to buy Seaforth, which now has until Sept. 26 to make a proposal to creditors under the Bankruptcy and Insolvency Act.
A purchase agreement “is close to being signed,” David Boyd of PricewaterhouseCoopers Inc. says in an affidavit filed July 28 in Nova Scotia Supreme Court in Halifax.
The proposal trustee reviewed documents related to the deal, met with Seaforth and its lawyer and discussed the issue with secured creditors.
While the agreement would require the court’s approval, Boyd says in the affidavit that “a sale of assets to Endurance Wind Power Inc. would allow for the highest recovery to the creditors of the company.”
Seaforth owes more than $4 million, including $2 million to the provincial Economic and Rural Development Department, $954,000 to the Atlantic Canada Opportunities Agency and $125,000 to Endurance, which is providing short-term financing to the troubled company.
The firm, which laid off its entire staff, is finishing up three projects: one at Universite Sainte-Anne in Church Point, one in Amherst and one in Pictou. Its projected cash flow report indicates the company is expecting payments related to two of the projects and a final payment from the Guysborough project.
Pitts said his municipality held back about $70,000 for the turbine project and will continue to do so “until the dust finally settles and we find out who is owed what, and plus we need to ensure we have a service agreement here, too.”
Both Pitts and Stevenson said they are waiting on the possible sale to Endurance and the creditor proposal to learn what will happen to their turbine warranty and continued service.
Toby Koffman, spokesman for Economic and Rural Development, said in an email that Seaforth’s proposal will address the company’s outstanding obligations, including warranties.
Overall, both Pitts and Stevenson said the turbines have met expectations, enough so that the Colchester-Cumberland group was looking to purchase a third Seaforth turbine, Stevenson said.
|Wind Watch relies entirely
on User Funding