Windflow seeks $5.8m for UK projects
Cash-strapped Christchurch turbine manufacturer Windflow Technology will ask shareholders to approve borrowing about $5.8 million for three United Kingdom turbine projects.
If shareholders do not support the deal there are questions over the future of the company which late last year raised $2m from shareholders to keep it going until June.
Windflow said it was proposing to borrrow from 11.9 per cent shareholder David Iles who is offering up to $5.8 million of funding.
Isles is asking for a 20 per cent interest rate on each of the three loans for each of the turbine developments.
Shareholders will be asked to vote on July 4 to approved three turbine projects in Scotland and the loans for them from Isles.
Windflow said it also remained committed to licensing internationally its technology, ntsGat least for manufacturing its designs for certain international markets such as North America.
It was committed to meeting its maintenance and warranty obligations for the Te Rere Hau wind farm in the North Island and would continue its market presence in the United Kingdom in the expectation that at least modest volumes of sales would be forthcoming.
The success of a $2 million capital raising in November, was achieved through underwriting by Iles, who at the time offered to provide funding towards the first three turbines for the UK market, the company said.
Since then it had made steady progress on a licence agreement with General Dynamics SATCOM Technologies, a unit of Fortune 500 company General Dynamics, for the Americas and Africa.
In the near term, revenue from the existing licence with General Dynamics would cover some but not all of Windflow's operating expenses.
The company needed revenue from other sources in order to secure the company's future, chairman Heugh Kelly said in a letter to shareholders.
The proposed projects were fundamental to the company's business strategy.
"In the event that none of the (shareholder) resolutions are passed, unless other turbine sales are concluded from amongst the more uncertain leads the company is working on, the directors are of the view that it will be difficult for the company to secure its future and continue to rebuild shareholder value," Kelly said.
There were presently 16 leading United Kingdom projects for individual turbines in the company's pipline, with other sales prospects in the region. The largest cluster of projects was in the Orkney Islands, with other projects on Shetland and the Outer Hebrides.
The first three proposed projects, at this point, were in Westray, Orkney with a £1.114 million loan facility needed; North Fish, Shetland, with a £645,000 loan needed; and North Harris, with a total loan facility of £1.07m needed
"In each case this is the full estimated cost of each project including contingency, and each is expected to be viable in its own right," Kelly said.
Iles had offered to advance up to £2.83m or approximately $5.805m to fund the projects, the company said.