Investor keeps Windflow turning

MARTA STEEMAN
Last updated 05:00 14/07/2014

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Christchurch's struggling wind turbine manufacturer Windflow Technology bought itself a bit more survival time this week with the issue of preference shares to its lifesaving shareholder David Iles.

These convertible preference shares are an important tool for Windflow because they are counted as equity and that is because they can be converted to ordinary shares at the choice of Windflow or the holder.

Windflow's survival depends at present on the backing of the expat Kiwi investor who the company has said lives in New York.

The company is focusing much of its effort on making turbines sales in the United Kingdom but has not announced any sales there yet.

Most of its revenue is coming from licensing its technology to big United States firm General Dynamics Satcom. In the half year licensing brought in $806,000.

But the cost of running the company a year is about $5m.

Loans from Iles to the company are helping meet those costs.

Iles has agreed to lend Windflow £7.38 million (NZ$14.6m) and Windflow has so far taken up £3.5m or almost half of it. Iles' loans are secured over the assets of Windflow's UK subsidiaries and Windflow guarantees the loans as well.

This week Windflow issued 5 million preference shares at a value of 50 cents each to Iles, raising $2.5m. Iles did not hand money over to Windflow. Instead he swapped $2.5m of the debt owed to him by Windflow for the preference shares.

Windflow has used the issue of preference shares to take it from negative equity, technically insolvent, to positive equity.

Yesterday Windflow chief executive Geoff Henderson said it had a sale of a wind turbine to a third party in Scotland but was not publicising it yet.

In the June 2014 year it had confirmed four turbine projects in the UK. The projects are run by Windflow subsidiaries, so delivery of turbines to those projects will not be counted as revenue.

Windflow's shareholders, about 800, are patiently backing the company which has clocked up $37m of losses in 13 years and said it would lose another $4.4m for the June 2014 year.

At present Iles holds 15.65 per cent of the ordinary shares and after the latest transaction 16.5m preference shares.

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- The Press

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