The dispute between NZ Windfarms and Windflow Technology over certification of turbines at the Te Rere Hau wind farm project has been resolved after months of negotiations.New Zealand Windfarms first began withholding payments to Windflow Technology in Au
The dispute between NZ Windfarms and Windflow Technology over certification of turbines at the Te Rere Hau wind farm project has been resolved after months of negotiations.
New Zealand Windfarms first began withholding payments to Windflow Technology in August until issues relating to turbine certification and fitness for purpose were resolved.
Payments started flowing again in November and there were indications the following month that the matter would soon be resolved, but the agreement between the two companies was not finalised until today.
The agreement settles all matters related to the certification status of the turbines supplied to the wind farm and also sets out timeframes and the payment terms for a further batch of 32 turbines.
The agreement is conditional upon NZ Windfarms completing a successful capital raising, with an offer document due to be released this week.
Last month it sent a notice of meeting to shareholders detailing plans to raise $31.4 million through a renounceable rights issue, indicating that it would become insolvent without additional capital.
The deal will see NZ Windfarms hold on to the total estimated remediation cost of $966,200, releasing the funds to Windflow Technology only if remediation works are undertaken during the five year warranty period
The funds could also be released before the end of that period if a report from an independent consultant provides an opinion that the affected components can be expected to achieve a 20 year life and accordingly do not need to be upgraded.
Without that report, any components not upgraded will be subject to a warranty from Windflow that extends to the end of the 20 year design life, provided it remains the operations and maintenance contractor. Any funds still being retained at the end of the warranty period will be repaid once the extended 20 year warranty is provided.
NZ Windfarms has also nailed down a deal with Aeolian Properties – which owns the windfarm site - will see a restriction on installing turbines within a 10km radius of the Te Rere Hau site in exchange for an adjustment to the royalty rate
Under this agreement, the royalties could vanish altogether if Aeolian Properties exercises a $3.55 million put option that will be in place for the second six months of 2010, giving NZ Windfarms full ownership of the land.
