Issues for Windflow Technology in withheld payments

Wind turbine company Windflow Technology says the withholding of payments by Te Rere Hau wind farm owner NZ Windfarms will shortly "become material" if further payments are withheld.

NZ Windfarms had withheld three payments since August 17, and had written to Windflow in regard to each payment stating it intended withholding the payment until issues relating to turbine certification and fitness for purpose were resolved, Windflow said today.

"The sums involved will shortly become material if (NZ Windfarms) withholds further payments."

In full year results published on Friday, NZ Windfarms said it needed to raise funds to complete Te Rere Hau, near Palmerston North.

It would not finalise a funding strategy until it had a better understanding of the implications of not receiving International Electrotechnical Committee (IEC) certified turbines, and had established the turbines were or would be fit for purpose.

The board and management were totally focused on obtaining independent expert advice on the turbines, NZ Windfarms said.

It said NZ Windfarms' board was confident of the company's ability to continue as a going concern.

But NZ Windfarms also pointed to factors which it said caused uncertainty as to whether it could continue as a going concern, and therefore whether it would be able to pay its debts as and when they became due and payable.

NZ Windfarms also said that when selecting the Windflow WF500 turbines for use at Te Rere Hau, it required that Windflow agree to seek IEC Class 1A design certification

The company had relied on positive progress reports from Windflow on the certification process when it placed orders with Windflow for 97 turbines, NZ Windfarms said.

Windflow had advised the turbines supplied to date and intended to be supplied for use at Te Rere Haul would not meet the required certification standard.

Windflow chief executive Geoff Henderson said about 59 of the turbines were on site now, and his company was intending to provide the rest.

He was sure the turbines were "more than good enough" for the task, pointing out the Windflow turbines at Te Rere Hau had been running in 90kmh to 108kmh winds in recent days, while imported turbines had all shut down.

Windflow had met its obligations under the sale and purchase agreement, which was to seek certification, Mr Henderson said.

Final documentation for certification was lodged at the end of July, with the process likely to take a few more months.

Windflow was now working with NZ Windfarms to obtain an independent expert review of the turbines.

At mid-afternoon, NZ Windfarms shares were down 7c to 60c, while Windflow shares were down 18c to $1.30.