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Windfarms gets resource consent breakthrough as Suncorp-related funds build stake

Friday 26th March 2010

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New Zealand Windfarms, the troubled electricity generator, has achieved a vital breakthrough in its struggle to remain viable, reaching agreement with an objector to allow a 56 turbine extension on a new site where higher wind yields are expected.  

The settlement comes ahead of an April 6 special shareholders' meeting to approve key elements of a $34.1 million rescue package to issue deeply discounted shares in an eight-for-three cash issue that the company says must succeed "or the consequences will be dire."

Knowledge that up to an additional 56 wind turbines can be placed on the so-called "extension site" at Te Rere Hau windfarm, can be expected to buoy shareholder support for the cash offer, and reduce the potential for 20% shareholder Vector to need to lift its holding to as high as 40%.

Following confirmation of the appeal's withdrawal, "NZ Windfarms will have clear consent to locate the 32 Batch 4 turbines in the extension area," said chief executive Steve Cross today. "Work is advanced on meeting the necessary pre-construction conditions of the resource consent," Cross said.

NZ Windfarms' share price rose 4 cents, or 13%, to 34 cents on the NZX today.

The developments were welcomed by both Cross and Geoff Henderson, the chief executive at Windflow Technology, the NZAX-listed, Christchurch two bladed wind turbine pioneer who count Windfarms as the only customer so far for the Windflow 500 machine.

"We're very pleased with that news," said Henderson, whose firm was also trading on the basis of "fundamental uncertainty" about its viability if NZ Windfarms were to fail commercially.

Windfarms has installed 65 turbines already, and has 32 on order, which Henderson said could now go into production. Windflow shares were unchanged at 99 cents this afternoon.

Cross said Windfarms would assess whether to take up all 56 turbine slots available at the extension site, but said the remaining 32 slots at the original Te Rere Hau windfarm site were comparatively unattractive and would require more transmission capacity if they were to be added to the farm.

The consent settlement was good news, as was the recent upturn in wholesale electricity prices, said Cross, who announced earlier this week that he would leave the company when his contract expires on June 30.

Meanwhile, funds related to Suncorp NZ, including Tyndall Investment Management, have been building a stake in New Zealand Windfarms this week. Their combined holdings have increased to 11.5%, according to a filing to the NZX today.

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