Windflow seeks another $4m
Profitless wind energy firm Windflow Technology is going back to shareholders for another $4 million as it continues to seek sales in the UK and develops a new version of its pioneering two-bladed wind turbine for lower windspeeds in collaboration with US-based General Dynamics.
The NZAX-listed company has extended its debt facilities by 4 million pounds sterling to 7.4 million pounds with its 16 percent shareholder, US-based expatriate David Iles, who is also underwriting $2.5 million of the new $4 million capital raising.
It held a special meeting last week to clear the way for Iles to raise his holding to above 20 percent, should he choose to redeem preference shares he currently holds.
In effect, that means the remainder of the Windflow shareholder base is being tapped for $1.5 million. The new capital is needed to help fund the manufacture of four turbines, at around $1 million apiece
Market reaction has been negative. Windflow shares closed at 4 cents today, a 40 percent drop that coincides with an investor roadshow, and has fallen 70 percent, or 14 cents a share, over the last year.
The company believes it will eventually get the traction it has sought in the UK for small-scale installations of its turbines under a British government-assisted scheme that offers a guaranteed price for electricity sold back into the UK national grid for a 20-year period.
It also hopes its tie-up with GD, ranked 86th on the Fortune 500 of largest US firms and standing behind the Windflow product's 10 year warranties, will give it heft with potential customers.
On paper, the UK scheme makes installing a Windflow 500 kilowatt unit commercially attractive by comparison with installations in New Zealand, where there are no subsidies and electricity demand is falling.
However, the UK scheme has also been dogged by a review of its terms, slow planning approvals and, more recently, a discovery that remotely located installations can have trouble feeding electricity back into the grid because of capacity constraints from remote locations.
The capital-raising offer is open until Dec. 30 and is open only to existing shareholders.
The debt facility will help Windflow maintain a staff of 20 to 25 and to meet its warranty obligations at Te Rere Hau windfarm in the Manawatu, the only large-scale application of the two-bladed turbines to date, which expire in mid-2015.
The company is targeting new sales of 12 turbines a year and says it is focusing on 36 "high potential projects", involving a total of 51 turbines.