Windlab has announced it has secured a $20 million loan from Squadron Energy and Federation Asset Management, ahead of the two firm’s proposed takeover of the listed wind farm developer.
The two firms, Federation and the Andrew Forrest backed Squadron Energy, have made a takeover offer for Windlab valued at just short of $70 million, and this will soon be put to shareholders for approval.
The loan will help bolster Windlab’s balance sheet, particularly as it continues to work through an ongoing dispute with the construction contractors engaged for the Kennedy Energy Park, which has been beset by lengthy delays and grid connection difficulties.
“The facility provides Windlab with access to the necessary funds to manage liquidity through any future project delays including Kennedy Energy Park,” the company said in a statement to the ASX.
An adjudication by a Queensland construction commission recently ruled that Windlab must pay the EPC contractor an outstanding $7.5 million in project milestone payments relating to the Kennedy project, along with denying Windlab’s ability to claim liquidated damages for the delays.
The dispute is set to be taken to the Queensland Civil and Administrative Tribunal, if a settlement cannot be reached between the two parties.
Windlab suffered a write-down of almost $30 million on the Kennedy project but expects that a positive way forward will ultimately be found for the project, and some of that value may be re-couped.
The Windlab board said that they had considered alternative funding arrangements, with the company previously flagging that it may approach the Clean Energy Finance Corporation to discuss its financial arrangements, but concluded the loan represented the “most favourable commercial terms” and that it was “fair and reasonable” from the perspective of Windlab Shareholders.
The access to additional funds will help to provide increased flexibility and headroom for the company, as it comes through a complicated period for the company.
Since the start of the year, Windlab has been forced to battle through the ongoing challenges at the Kennedy Energy Park, along with consideration the takeover proposal and implementing the results of a strategic review into the company’s ongoing operations.
In January, Windlab decided to scale back its operations in North America deciding to close its US office and told investors at its half-year results update that it would pivot towards Africa as a region with strong growth potential for new wind farm developments.
Windlab had flagged the potential for the loan facility when it confirmed that it executed a scheme of arrangement with the takeover consortium.
The terms of the loan will require Windlab to make quarterly repayments back to the lenders and will need to be repaid back in full if Windlab is subsequently acquired by a third-party.
The loan is not contingent on shareholders voting to approve the subsequent takeover of Windlab by the partnership of Federation and Andrew Forrest backed Squadron Energy, and the debt will have “secondary status” compared to outstanding listed shares in the company.
To date, the CSIRO spin-off has completed the development of more than 1,000MW of wind generation capacity and has an additional 7,500MW of new projects under development in Australia and overseas.
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