Windflow investor remains mighty resolute
State power company Mighty River Power is unwilling to inject more capital into Christchurch turbine maker Windflow Technology, which may face closure.
If Windflow's small shareholders do not stump up $2 million in cash in its capital raising, it will hold a meeting of shareholders in late October to see if they want it to keep going or wind up.
Windflow, a maker of small two-bladed turbines, says $2m will keep it going until January, when it receives final payments for turbines for the Te Rere Hau wind farm in the Manawatu.
It has been asking shareholders to pay 50c a share, but recently its stock has fallen to 25c a share in trading at the NZX.
The company has commitments so far of $693,000 from small shareholders and a further $624,000 is being raised through private placements.
It said on Friday its cash would be depleted by the end of the month.
Windflow is now living on a $150,000 loan from its founder and largest single shareholder, Geoff Henderson.
Mighty River Power, the large Auckland state-owned electricity generator and retailer, faces losing most of its $7.1 million investment made in Windflow in late 2008, but does not appear too concerned.
Its general manager for business development, Mark Trigg, said its position was fairly clear. He said it had not taken up shares in a capital raising six months ago and was not taking part in this capital raising.
"We have had several discussions with Windflow outside of those two specific capital raisings. But it's fair to say that strategically the investment in Windflow is not something that we see as a high priority for Mighty River. "
Geothermal power is what Mighty River is mainly interested in.
The company has invested US$250m (NZ$325m) in geothermal power overseas.
"We are simply happy to remain a passive investor," Trigg said.
"Yes, we made an investment circa $7m and it's certainly not worth that at today levels."
When Mighty River made the investment in 2008 it had been examining a number of power development options such as using wind power, using landfill gas and exploring for gas, he said.
Others have speculated that the Government may have asked Mighty River to invest in Windflow because the investment was made a few months after Windflow complained at the official opening of its new factory by Prime Minister Helen Clark in 2008 that it was not supported by the state power companies.
"No, I don't believe that there was any connection, " Trigg said on Friday.
"There had been no directive that I'm aware of at any point in time on any matter relating to the business of that nature. So I would certainly put that down to circumstances of timing," Trigg said.
Windflow has been successful in its 10 years in business only in selling its turbines to a subsidiary it set up to test the turbines, New Zealand Wind Farms – which is no longer a subsidiary.
Trigg said Mighty River was still interested in wind power and saw it as important for the future.
However, he said wind-farm development was struggling because there was plenty of electricity supply and Mighty River did not expect the supply-demand balance to shift and encourage more wind-farm development until after 2015.