Daily ShareChat: NZ Windfarms

By Jenny Ruth

Wednesday 23rd December 2009

NZ Windfarms' cornerstone shareholder Vector has "used its position as a lender of last resort to extract some punitive terms," says Forsyth Barr analyst Andrew Harvey-Green.

Vector has lent NZ Windfarms $6.5 million at "an eye-watering" 15% interest and Vector will also receive $65,000 as an arrangement fee and an ongoing line fee of 2% a year.

Harvey-Green says NZ Windfarms can no longer hold off on raising further capital and a rights issue will be used to repay the Vector loan.

"The exact amount of the rights issue will depend on whether NZ Windfarms receives resource consent for its wind farm extension. If it does, we expect a capital raising of around $30 million," he says.

If the company doesn't get resource consent, Harvey-Green estimates it would need to raise about $12 million, depending on what price it can get on the already-purchased Stage 4 turbines.

"We believe that NZ Windfarms is more likely than not to receive the necessary consent," Harvey-Green says. "However, nothing is guaranteed. We will find out in January."

"Notwithstanding the forthcoming rights issue and the dilutive impact that it will have on our valuation, we believe there continues to be reasonable upside in NZ Windfarms, albeit somewhat less if the resource consent for the extension site is not granted."

BROKER CALL: Forsyth Barr rates NZ Windfarms as accumulate.

Comments from our readers

No comments yet