Struggling Windflow says it has funding

TAMLYN STEWART
Last updated 16:16 07/12/2012

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Struggling Christchurch wind turbine maker Windflow Technology says it has secured the funding it needs to keep going until it can complete a capital raising early next year.

The company did not say how much funding it had secured but said it had been provided by a mix of equity and short-term debt facilities from existing shareholders.

In a separate announcement the company said it had issued 875,000 ordinary shares at 40 cents per share to large shareholder David Iles, raising $350,000.

That takes Iles' stake in the company from 11.9 per cent to 15.6 per cent.

Windflow shares last traded at about 19 cents a share and have traded between 33 and 15 cents a share during the last year.

Asked about the discrepancy between the price Iles paid and the level Windflow shares are trading at, Windflow chief executive Geoff Henderson said Iles had offered 40 cents a share.

Henderson said Iles felt that if he were to buy that quantity on the market he would not be able to get them at the present price because the shares were very thinly traded and the price reflected the value Iles saw in the company.

The cash-strapped turbine maker reported a $4 million loss for the year to June 2012 due to a lack of sales. Last month Windflow said it needed bridging finance to stay afloat until it could hold a substantial capital raising next year.

Meanwhile today the company also announced it had secured an agreement for its second British-based Windflow 500 turbine, destined for New Holland farm on the main island of Orkney, north of Scotland.

Subsidiary Windflow Hammer Limited now has a lease agreement with the landowners and financing approval for the project. Windflow Hammer would develop the project and would initially own the turbine. The landowners would have a five-year option to buy some or all of the project as it progresses.

It is the second of up to three Windflow turbines in Britain that the turbine manufacturer will fund through its July 2012 construction finance agreement with major shareholder David Iles.

Once operating, the turbine will earn revenue of approximately 22 pence per kilowatt hour through the British government's feed-in tariff scheme, providing returns on investment of approximately 20 per cent to 30 per cent per year before tax, the company said.

The nacelle will be assembled at Windflow's Christchurch facility before being shipped to Britain late next year.

The nacelle of the first Britain-bound Windflow turbine will be installed at the Hammer farm on Westray, Orkney Islands early next year.

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