Windflow faces strife if Windfarms doesn't pay

Tuesday 1st September 2009

Pioneer two-bladed wind turbine maker, Windflow Technology, warned today that non-payment of invoices by its main client, New Zealand Windfarms, will "shortly become material" if further payments are withheld.

In a statement to the stock market operator, NZX, Windflow said it "notes with concern the statement in NZ Windfarms (NWF) preliminary year-end announcement on Friday 28 August that there is uncertainty as to whether Windfarms can continue as a going concern".

Windflow is due to report its preliminary full year results by September 11 and is communicating with Windfarms seeking further details on its plans to "put in place the appropriate funding". Windfarms has withheld three payments for 48 turbines since August 17, citing issues relating to certification and fitness for purpose of the Windflow turbines, and is due to make a final $2.1 million payment on September 17.

Windfarms, owned 20% by listed network company Vector Ltd, is developing its Te Rere Hau windfarm in the Tararua Ranges using Windflow's locally developed two-blade turbines, and complained last month that Windflow had not met its stated objective of certification at the International Electrotechnical Commission WT01 standard for its turbines.

Modifications have been required to the turbines to meet the standard. However, Windflow is confident the certification will be granted and that the turbines already installed at Te Rere Hau are performing to expectations, including running when high winds are shutting down conventional, three turbine wind farms nearby.

"Windflow is clear that the turbines provided for Te Rere Hau have been ordered, delivered and operated in accordance with the Sale and Purchase Agreement (SPA) between the parties and that the turbines provided are fit for purpose," said Geoff Henderson, the managing director of Windflow, which is 20%-owned by MightyRiverPower.

"Windflow would prefer to resolve this matter amicably and will continue its efforts in this regard."

Windfarms reported a profit $961,000 for the year to June 30, down 60% on the previous year, and warned that it would need to raise funds to complete Te Rere Hau and expressed concern as to whether it could trade through the next 12 months.

The company did not specify the size of its funding needs and the board determined it could not put in place a funding strategy until the fitness for purpose of the Windflow turbines was established.

Businesswire.co.nz

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