Windflow Announces Capital Raising

NZX STATEMENT
2 November 2010

Windflow Announces Capital Raising

Windflow Technology advises that it is to proceed with the capital raising foreshadowed in its annual report and at the company’s recent annual meeting, with an intention of raising approximately $5 million.

The company intends to make a 1-for-2 rights issue for the principal purpose of enabling the company to take advantage of an immediate opportunity for sales of the Windflow 500 wind turbine into the United Kingdom market.

“As stated at the annual meeting and advised earlier to NZX, less than three months ago Windflow appointed a UK company, Ventus Green Energy Ltd, as exclusive distributor of Windflow turbines in the UK,” said the Windflow chairman Mr Barrie Leay.

“This followed the introduction of British Government policies to encourage the installation of new low carbon electricity generation, including major incentives for purchasers of 500 kW turbines such as the Windflow 500.

“Windflow considers it prudent to raise additional capital to provide an appropriate balance sheet and enable the company to take up the business opportunity to develop exports to the UK market.”

The company will hold public information evenings throughout the country in mid-November.

Details of these meetings will be available shortly at www.windflow.co.nz.
Following registration a copy of the prospectus and other relevant documents will also be available at www.windflow.co.nz.

Shares will be offered at an issue price of $0.90 per new share, which is considered to be an attractive price for investors for the following reasons.

• It represents a 14% discount to the last sale price immediately prior to the company’s annual meeting.
• It is at the lower end of the trading range of Windflow Technology shares during the last 12 months of $0.84c to $1.51.
•
Existing issued capital: 11,993,489.

Total number of new shares to be issued: 5,996,745.

The issue will be partially underwritten by Aeolian Property Co Ltd which has agreed to subscribe for placement shares up to a maximum of 1,111,111 shares at the rights issue price of $0.90 per new share. Aeolian Property comprises an investment group that includes some original investors in Windflow Technology among them Windflow founder Geoff Henderson.

The record date for the determination of entitlement to rights is 5:00 pm on Thursday 11 November 2010.

The offer includes an opportunity for any shareholder accepting their entitlement in full to apply for additional new shares at $0.90 each, to a ceiling no more than twice the number of existing shares held on the record date.

The rights to the issue will be renounceable. Existing shares will be quoted ex-rights on the NZAX market as from the opening date of the rights issue, Tuesday 9 November 2010. Rights trading will cease at 5pm on Monday 29 November 2010.

The offer will close at 5:00 pm on Friday 3 December 2010.

Intended Offer Timetable:

Rights trading opens 9 November 2010
Record Date 11 November 2010
Despatch of offer documents 15 November 2010
Rights trading ceases 29 November 2010
Closing date for acceptances 3 December 2010
New shares commence trading 9 December 2010

The company is not seeking subscriptions at this stage, with the rights offer yet to open. Subscriptions will only be accepted via the application form enclosed with the prospectus.

ENDS

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