Renewable energy developer Windlab has extended its truce with contractors in the ongoing dispute over the troubled Kennedy Energy Park, putting off any further action until either the execution of a settlement deed, or the end of April – whichever comes first.
In an ASX statement on Thursday, Windlad said that it had agreed with the north Queensland project’s EPC contractor to extend the so-called “stand-still agreement”until the earlier of 30 April 2020 and the conclusion and execution of a settlement deed by the parties resolving all disputed claims.
“For the extended stand-still period, the parties have agreed to stay payments and not commence or prosecute any claims or disputes under the contract nor challenge the adjudication determination, subject to certain conditions,” the statement said.
The companies had also agreed that they would “in good faith” try to reach an overall commercial resolution of all disputed claims and thus provide the certainty required for the wind, solar and wind, solar and energy storage project to get back to the business of network system registration and commercial operation.
The truce, first established in mid-February, was originally requested by the EPC contractor – a joint venture between Vestas and Quanta Services – after a Queensland construction commission ruled Windlab must pay the contractor an outstanding $7.5 million in project milestone payments.
When Windlab indicated it would challenge the decision in the Queensland Civil and Administrative Tribunal, the contractor requested all parties hold off, to avoid being dragged into costly and lengthy legal proceedings.
The truce gives Windlab come breathing room on the milestone paymens, while giving both parties the chance for a resolution to be negotiated outside of the courts.
The Kennedy Energy Park is a 50-50 joint venture between Windlab and Japanese firm Company Eurus Energy combining 42MW of wind capacity, 15MW of solar and 2MW/4MWh of battery storage.
The innovative $100 million project won the backing of both the Australian Renewable Energy Agency which provided an $18 million grant and the Clean Energy Finance Corporation which provided debt finance to the project.
It is, however, running almost a year-and-a-half behind schedule due to failures in getting approvals for its generator performance standards, which culminated in the contractual dispute, a $29.4 million write-down on the energy park, and Windlab going into a trading halt pending the outcome of negotiations on the company’s proposed acquisition.
Last week, mining magnate Andrew ‘Twiggy’ Forrest emerged as a key backer of the takeover offer through Squadron Wind Energy Development, which is owned by Forrest’s Minderoo Group.
Windlab confirmed it had signed a binding ‘Scheme of Implementation Agreement’ with a consortium consisting of both Federation Asset Management and Squadron, for an offer that would purchase all outstanding shares in the company, for around a 40 per cent premium on the share price prior to the announcement of the takeover offer.
