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NZ Windfarms, seeking financial lifeline, says CEO Cross won't renew contract

Monday 22nd March 2010

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New Zealand Windfarms, which wants to raise more than its market capitalisation in a discounted share issue to ensure survival, said chief executive Steve Cross is to leave the company.

Cross cited personal reasons for not wanting to renew his contract when it ends on June 30, Windfarms said in a statement today.

He will stay on until August 30 to assist in a transition. The board didn’t explicitly say it will seek a replacement. Instead, it announced an immediate review “to establish the ongoing management requirements for the Company, and set in place a process to ensure that there is appropriate management".

The shares were unchanged at a record low 32 cents, having tumbled 52% in the past year, valuing the company at $25.1 million.

On Friday, Windfarms announced plans to raise $34.1 million in an eight-for-three cash issue at 15 cents apiece that the company said must succeed "or the consequences will be dire.

"The offer amounts to a discount of more than 50% from its current share price though it has signaled the shares may still not be cheap enough to woo investors.

It has called a special meeting of shareholders for April 6 to seek support to allow 20% shareholder Vector to own as much as 39.9% of the company if it chooses to take up additional allotment.

Windfarms has so far been unsuccessful in finding an underwriter for the issue and lead issuer Goldman Sachs JB Were is being offered a 2.75% incentive fee on the total raised to encourage uptake and identification of underwriters.

Unless a minimum of $25.6 million is subscribed, the issue will not proceed and the independent appraisal report from investment bankers Northington Partners warns that debt-raising and more deeply discounted offers are unlikely to be attractive or feasible.

The company today said its present focus is on completing the Te Rere Hau windfarm project it doesn’t foresee “any problems in obtaining the appropriate resource to ensure that this project continues seamlessly.”

Te Rere Hau in the Manawatu has struggled with combination of costs to acquire 50% of the venture previously owned by a subsidiary of failed infrastructure company Babcock & Brown, and low revenues from wind generation.

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