CORRECT: NZ Windfarms to buy Te Rere Hau wind farm distribution assets from Powerco for $17.3M
(Fixes assets to be purchased in headline, lede and 2nd paragraph)
By Paul McBeth
Aug. 3 (BusinessDesk) - NZ Windfarms plans to buy the distribution and transmission assets attached to its Te Rere Hau wind farm near Palmerston North that it has leased from lines company Powerco for almost a decade for $17.3 million.
Palmerston North-based NZ Windfarms has unsuccessfully tried to restructure its lease agreements with Powerco that force it to hold $6.5 million of cash, and earlier this year said it was looking at alternative ways to meet the guarantee. Today it announced plans to buy the transmission assets supporting its 97 turbine-farm subject to due diligence, raising enough money to pay for assets, and getting shareholder approval. NZ Windfarms would use $5 million of existing cash and have the balance funded by its lender, saying it's well advanced to securing that finance.
"We have undertaken our own analysis and engaged third part advisers to ensure we are paying a fair price for the assets and we believe we are," chairman Rodger Kerr-Newell said in a statement. "The acquisition has other positive effects on the company such as providing control across both generation and transmission assets to the injection node. It will also improve the company's free cash flow allowing that cash to be used for other purposes."
NZ Windfarms has been reshaping itself over the past year, slashing a fifth from its workforce to clamp down on costs, and overcoming equipment failure and maintenance issues with the two-bladed turbines built by Windflow Technology and used at the Te Rere Hau wind farm.
If the deal proceeds it will likely be completed in September or October.
Separately, NZ Windfarms said it had attracted a suitor interested in buying assets or taking over the company, but couldn't shake out a formal offer when the parties were at odds over price.
"The board took into consideration work-streams underway including the cost out programme and other initiatives in progress and decided that the interest did not match the board's view on value as the company reshapes itself to take effective advantage of the considerable assets it has," Kerr-Newell said.
NZ Windfarms shares rose 4.7 percent to 9 cents, valuing the company at $25.9 million.