David Iles, a US shareholder of Windflow Technology who bankrolled its UK activities, will take control of the unprofitable turbine maker and forgive some $21 million of loans in exchange for the company's UK subsidiaries.
The announcement was made with Windflow's annual results, which showed a wider loss of $4.3 million in the year ended June 30 and an acknowledgment that its seven-year investment in the UK market "has not paid off", with the eight turbines in operation far below expectations and sales generated not enough to cover the company's overheads as a turbine manufacturer.
Annual sales were $606,000, excluding revenue from discontinued operations of about $1.1m from the UK, up from $363,00 a year earlier. Faced with negative equity of $7.3m (up from $2.8m a year ago) as a result of its accumulating loan liabilities, which has hindered Windflow's ability to enter new long-term business relationships, the company has entered a conditional agreement with Iles that will allow it to repay the debts by transferring the UK-based assets to him and converting all its outstanding convertible preference shares. His holding would rise to 73 per cent from 42 per cent if the deal, which needs shareholder approval and is subject to due diligence, proceeds.
However, repaying the debt won't be enough to maintain Windflow as a going concern, it said today. As a result, the company will shutter its Christchurch factory and shrink its headcount down to "the minimum staff numbers" needed to support the operation and maintenance of the UK turbines and chase other potential sources of revenue. It hasn't been able to conclude any licence deals for its technology.
Winflow also gave a gloomy account of the New Zealand market, which it said "continues to stagnate because of an oversupply of power and weak prices for carbon in the global emissions trading markets." The company had intended to raise more capital in 2016-17 but that had depended on being able to increase licensing, engineering services, turbine sales, turbine project developments and electricity sales.