NZ Windfarms chief exec resigns

New Zealand Windfarms is losing its chief executive while carrying out a deeply discounted capital raising to remain solvent.

The company said today that chief executive Steve Cross has advised that for personal reasons he does not wish to extend his contract, which expires on June 30.

The board is immediately commencing a review to establish the ongoing management requirements of the company.

The company's share price fell 7c, or 18 per cent, to 32c on Friday after it sent a notice of meeting to shareholders detailing plans to raise $31.4 million via a renounceable rights issue. The price was unchanged today.

An independent report from Northington Partners said NZ Windfarms would become insolvent without additional capital.

"If for any reason the company cannot raise the capital to complete the development, the consequences will be dire," the report said.

The developer of the Te Rere Hau windfarm in the Manawatu is 19.9 per cent owned by Vector Ltd, which has provided it with a $6.5m bridging loan. A dispute with turbine supplier Windflow Technology has delayed capital raising plans.

The capital raising detailed on Friday must be approved by shareholders at a special meeting on April 6.

Shareholders have the right to buy eight new shares for every three held at 15c each. The rights issue will not proceed if a minimum subscription amount of $25.8m is not raised.

The rights issue is not underwritten. The intention is to place shares not taken up with institutions and eligible shareholders, including Vector via a "possible Vector underwriting commitment".

A potential allotment to Vector is subject to a limit that would give it a maximum 39.9 per cent shareholding in the company. Northington Partners said it believed it was unlikely that Vector's shareholding would reach the maximum.

If the potential Vector allotment was not approved by shareholders, the rights issue may not proceed given the uncertainty that would exist as to whether the minimum subscription amount could be raised.

"We believe that it is unlikely that the necessary capital will be raised if the rights issue is not successful," Northington Partners said.

If NZ Windfarms became insolvent and was put into receivership, the windfarm would be incomplete and there would be claims on the assets of the company from secured creditors.

"We believe that the realisable value to shareholders under a receivership will be significantly lower than if the company continues as a going concern and is able to complete the windfarm development," the independent report said.

The rights issue offer will be sent to shareholders on April 7 and will close on April 29.

NZ Windfarms is paying Goldman Sachs JBWere a fee of 2.75 per cent of the money raised.

- NZPA