Windflow's turbine loan approved
The shareholders of cash-strapped Christchurch turbine manufacturer Windflow Technology have given the company the green light to borrow about $5.8 million at high interest rates from shareholder David Isles for three turbine developments in Scotland.
About 30 shareholders gathered at a special meeting last night in Christchurch to vote on three loans from Isles, an ex-pat Kiwi banker working in New York.
In total the Christchurch manufacturer of small turbines will borrow 2.8 million pounds (NZ$5.8m) from Isles to fund the projects at a 20 per cent interest rate compounding daily, effectively a rate of 22 per cent.
Windflow Technology will make most of the two-bladed, 500 kilowatt turbines in New Zealand but the heaviest and largest part, the tower will be made in the UK.
The funding will provide the struggling manufacturer with three more sales and it hopes they will demonstrate its technology further in the United Kingdom and lead to other sales in that market where a Government ''feed in tariff'' scheme subsidises and encourages the production of renewable energy such as wind power.
Chief executive Geoff Henderson said once the turbines were generating power and earning revenue, the risk around the projects reduced and the company expected to be able to refinance at lower rates. Isles was prepared to lend for 10 years if necessary.
He said the revenue from one 500KW turbine in the UK was equal to what could be earned from five to 10 similar turbines in New Zealand because the UK feed in tariff scheme boosted what the renewable energy producer received
The company held proxy votes for 7.92 million shares while there was another 1.08m share votes in the room yesterday evening.
Together they amounted to 46 per cent of the shares of the company and those shares voted unanimously to allow the company to borrow the funds from Isles. Fifty-four percent of the shares were not voted.
The largest shareholder, state power firm Mighty River Power with 12 per cent, a passive investor now, did not vote.
None of the shareholders at the meeting voted against the proposals which were recommended by the board of directors.
The resolutions were regarded as major and material transactions requiring 75 per cent support of the shares that were voted.
The shareholders also voted to allow the company to substitute other projects for the three if the projects were similar.
The projects will be carried out through special purpose vehicles of which Windflow UK, a wholly owned subsidiary of Windflow Technology, will hold a majority share.