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 $6.5m 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 $5m 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.
