21 Jun 2012

Windflow Technology seeks approval to borrow $5.8m

8:06 am on 21 June 2012

Struggling wind turbine maker Windflow Technology is seeking shareholder approval to borrow another $5.8 million to fund three projects in the UK.

The listed company says shareholder David Iles, who holds a 12% stake in the firm, is offering a £2.8 million ($NZ5.8 million) loan to fund three wind turbine projects in Scotland.

Mr Iles, who underwrote the firm's $2 million capital raising last year, will charge interest of 20% per annum on the three loans for the developments.

Windflow chief executive Geoff Henderson says the company has a well-thought out strategy in the UK and he hopes there'll be good support for Mr Iles' offer.

He says for this type of construction finance and the flexibility the potential loan is providing, it's effectively the going rate.

Mr Henderson says examples of the loan's flexibility include the fact that it can be repaid at any time without penalty and unlike construction finance in general, Mr Iles is providing the flexibility for the loan to roll-over into a 10 year facility.

He says the company has 16 projects in the pipeline in the UK, but none as advanced as the three subject to finance.

Mr Henderson says projects have been stalled for a year or more because of the review of the Feed-In Tariff scheme that took place last year.

He says this loan will enable Windflow to proceed and start to resume manufacturing in Christchurch and serve as a demonstration of Windflow in the UK and inspire other customers to come forward.

The special meeting will be held in Christchurch on 4 July, and at least 75% of shareholders must vote in favour of the deal for it to go ahead.