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.
