Wind Power Ponzi Scheme Implodes: IFM Investors Ditches Pac Hydro & Pac Hydro, AGL and RATCH Ditch Wind Farms

house-of-cards

It had “inevitable” written all over it.

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The wind industry in Australia – as elsewhere – is in its death throes. STT has likened it to the great corporate Ponzi schemes, pointing out, just once or twice, that the wind industry is little more than the most recent and elaborate effort to fleece gullible investors, in a list that dates back to “corporate investment classics”, like the South-Sea Bubble and Dutch tulip mania.

In the wind industry, the scam is all about pitching bogus projected returns (based on overblown wind “forecasts”) (see our posts here and here and here and here); claiming that wind turbines will run for 25 years, without the need for so much as an oil change (see our posts here and here and here); and telling investors that massive government mandated subsidy schemes will outlast religion (see our posts here and here).

In Australia, one of the wind industry’s BIG players – Pacific Hydro – managed to rack up an annual loss of $700 million, last year; in circumstances where the subsidy scheme – on which its profits depend – hasn’t changed at all (see our post here).

But – if you needed any more convincing that wind power outfits are taking their cues from Charles Ponzi and Bernie Madoff – then this run of recent stories should do the trick.

The first relates to Pac Hydro’s principal investor, Union Super Fund backed IFM Investors ditching its beleaguered “asset”, with all the grace of a kid thrown a hot potato. The fire-sale is all about cutting the parent’s massive and mounting losses:

Pacific Hydro’s Ponzi Scheme Implodes: Wind Power Outfit Loses $700 Million of Mum & Dad Retirement Savings

Here’s a take on IFM’s efforts to cut to and run, from wind industry spruiker, John Conroy (referring to RET Review Panel head, Dick Warburton as a “climate-sceptic” – whatever that’s supposed to mean? – is a dead giveaway).

IFM set to offload PacHydro; $2bn price tag mooted
Business Spectator
John Conroy
16 April 2015

The fund manager owners of renewable energy company Pacific Hydro – which has wind, solar, hydro and geothermal projects in Australia, Brazil and Chile – are understood to have appointed investment banks a full sale of the company, The Australian Financial Review reports.

According to the newspaper, IFM Investors, which owns IFM Australia Infrastructure Fund which owns 100% of PacHydro, has run the business past investment bank suitors in recent weeks.

The AFR believes IFM has appointed Bank of America Merrill Lynch and Credit Suisse to run an auction on the business to those suitors who had lodged pitches up until yesterday afternoon, with the newspaper declaring the sale could fetch up to $2bn.

PacHydro was rocked by a $685 writedown late last year, attributed to uncertainty surrounding the large-scale Renewable Energy Target caused by the Abbott Government’s devastating review of the scheme, which saw a climate-sceptic headed review panel recommend either its abolition or large cuts – despite its modelling showing consumer benefit from keeping the scheme untouched – and which precipitated a roughly 80% drop in large-scale renewables investment in Australia for 2014.

The writedown led to the resignation from PacHydro’s board of key IFM figures Garry Weaven and Brett Himbury.

The company also cited less-than-expected electricity demand in Australia and tax charges in Chile, the newspaper said.
Business Spectator

So, that’s the general rub on IFM’s efforts to stem its bleeding; but the panic doesn’t end there. Oh no. As is often the case, financial calamities spread like the Black Death; and those still holding the fast-festering assets behave with all the decided calm of howling Banshees.

banshee

Sell, SELL, SELL, SELL ….. FFS, SELL!!

****

AGL has joined the panicked hoard, seeking to ditch its Macarthur disaster: an operation that cannot and will never comply with the noise conditions of its planning consent (see our post here).

And, having had the “tap” from its parent, Pac Hydro is now desperate to find a sucker to take over its brewing legal liability at Cape Bridgewater (see our post here).

AGL, PacHydro offering stakes in Vic wind farms
The Australian
John Conroy
8 May 2015

AGL Energy is offering up part of its 50% stake in the 420MW Macarthur wind farm (Australia’s largest) while Pacific Hydro has put the 58MW Cape Bridgewater wind farm and a portion of the Portland wind farm on the market, The Warrnambool Standard reports.

According to the newspaper, AGL is offering the stake in order to free up capital but plans to continue to operate the farm, saying it had already changed the financing for its stake in five other major Australian wind farms.

“Capital would be recycled into other activities including growing new businesses in solar, digital meters and battery storage,” a spokeswoman told The Standard. “There will be no change to AGL continuing to operate and purchase for customers 100% of the renewable energy output from Macarthur and it will continue to be included as an AGL wind farm for all generation reporting.”

Pacific Hydro, which is reportedly seeking to be sold by parent company IFM Investors, is in the process of finding a buyer for its wind farm section, the newspaper adds, with an IFM spokesman telling it the move was “purely a business decision. These are well sought-after assets around the world. The wind farms will continue operating,” he said.
The Australian

Thai turbine-terrorists, RATCH have also reacted with crazed panic; and have put everything up for grabs – clearly hoping to get out of a brewing financial collapse by way of the “greater fool theory“, that vendors of toxic assets rely on when they’re looking to ditch them in a hurry.

Credit Suisse, Flagstaff approach buyers for RATCH-Australia
The Australian Financial Review
Sarah Thompson, Anthony Macdonald and Jake Mitchell
11 May 2015

RATCH is not expected to be everyone’s cup of tea. The company is not a mainstream power generator, but has contracted generation including take-or-pay contract agreements in place for the next 10 to 15 years.

Thai power generation company Ratchaburi Electricity Generation Holding has put its 80 per cent stake in Australian power generator RATCH-Australia Corporation on the block, joining 20 per cent partner Transfield Services in trying to exit the company.

It’s understood RATCH has had advisers Credit Suisse and Flagstaff Partners talking to potential buyers in recent weeks and is seeking a bid of about $700 million for the wind, solar and gas power generator.

RATCH is not expected to be everyone’s cup of tea. The company is not a mainstream power generator, but has contracted generation including take-or-pay contract agreements in place for the next 10 to 15 years.

Its portfolio generated more than 815 megawatts as of April 2014, and consists of ownership, or an interest in gas power stations and wind farms around Australia such as Toora Wind Farm in Victoria and Collector Wind Farm in NSW.

Logical buyers for the RATCH joint venture include specialist investment fund Infrastructure Capital Group, Canadian power generator and marketer TransAlta and Singapore’s SembCorp.

Sources said the sale was in its infancy, however, RATCH’s advisers had started engaging with potential bidders.

The sale marks a significant strategic step for Thai-listed Ratchaburi, which appears to be ending its ties with Australia.

Meanwhile, Transfield Services has been trying to sell its RATCH stake to its Thai partner for at least the past two years. However, it’s understood the prolonged talks came to nothing and Ratchaburi, tended to by Credit Suisse, decided to pile its stake into the proposed sale.

Flagstaff had been working with Transfield on the deal.

Transfield and the Thai power company have jointly owned RATCH since 2011, when Ratchaburi acquired 80 per cent of the listed Transfield Services Infrastructure Fund.

While Transfield kept a 20 per cent stake in the JV, it was one of three assets identified as non-core at the group’s half year results in February 2013 and it remains in the “non-core” bucket.

Elsewhere, it’s understood private equity-owned DTZ Group’s $US2 billion ($2.5 billion) bid for rival property services company Cushman & Wakefield will be announced as early as Monday.

As revealed by Street Talk, former CBRE chief Brett White met lenders for the first time as DTZ executive chairman last month, seeking their support for DTZ’s offer for Cushman & Wakefield.

DTZ is looking to fund the purchase by raising an additional $US1.3 billion in the US Term Loan B market with UBS, JPMorgan, Credit Suisse, and Bank of America Merrill Lynch making up the debt syndicate.

The new loan is on top of its existing $US1 billion of facilities in place. DTZ’s owners, led by global private equity giant TPG, will also tip in equity.
Australian Financial Review

It takes a little reading between the lines to understand what’s causing so many rats to leave a sinking ship all at once.

The theme pitched up by wind industry shills, like John Conroy, is that there’s a conspiracy set up by – as his ilk calls them – “climate deniers”, like RET Review head, Dick Warburton, which has led to “dreaded uncertainty” over the LRET .

However, there has been no change to that legislation in the more than 5 years since the Green/Labor alliance upped the ultimate annual target to 41,000 GWh back in 2009. But that doesn’t mean there won’t be – and it’s bankers, rather than wind power outfits, that have the most at stake.

STT hears that Commercial lenders are treating their loans to wind power outfits as being riskier than hang-gliding, parachuting and deep-sea diving – all on the one day.

hang glider crash

One little adventure your Life Insurer will never cover …

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Bankers are refusing to even consider rolling over their existing facilities with wind power outfits. And, as the terms of these facilities expire (many have, and many more are about to), the wind power outfit concerned has a choice: it can either find another banker willing to lend; or cash in its assets and repay the loan.

That Pac Hydro, AGL and RATCH are putting their wind farms on the block, suggests that they can’t find another willing lender (at least one willing to lend at a commercial rate of interest); and, therefore, have no other option but to flog their “assets” ASAP, in order satisfy their current lender’s demands (by repaying the outstanding loan in full), before it sends in the receivers.

STT also hears that the BIG Banks have taken the view that – unless Hell freezes over – they will never again toss up any finance for any new wind farm projects, on any terms.

As a result, the likes of Infigen, Pac Hydro, RATCH and Co will soon become a lamentable piece of Australia’s history. We’ve said it before, and we’ll say it again: if you have so much as a penny invested in wind power outfits, grab it and get out NOW!

titanic

Did anyone have the heart to tell Miles George & the boys from
Infigen that this bad boy’s going straight to the bottom?

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Sonia Trist says:

    SOS.. Did I just hear, on the radio, Macfarlane saying the wind industry needs to build as many wind turbines in the next five years, as have been erected in the past 15 years?

    Sonia Trist, Cape Bridgewater.

  2. Waiting to see when Chinese owned companies with operations in Australia like Energy Australia and Goldwind flex their financial muscle and pick up the many wind energy ‘assets’ being flogged at the moment.

    China cannot afford to let the market drive down the price of these ‘assets’. They need to manufacture the turbines and sell them into Australia.

  3. Martin Hayles, Curramulka says:

    “Climate denier”.

    What is it? Denial that there is a climate? Denial that there is not?

    Not believing that a certain mindset is correct and not believing in their version of science, even though it is based on a theory and nothing more , nothing less,and certainly not that which pertains to scientific rigour ?

    Not believing in a consensus, even though consensus has no basis in science?

    Even though consensus is nothing more than being part of a group agreement.

    Or is its connotation a moral equivalence, something much more sinister?

    Is the word denier and the supposed denialist, akin to those who refuse to believe that the Jewish Holocaust of the mid-twentieth century occurred?

    This concept is often left unspoken but the implication is clear.

    Those who refuse to toe the party line of unsubstantiated Catastrophic Anthropogenic Global Warming/Climate Change are evil.

  4. Don’t forget about Energy Australia selling off Waterloo wind farm as well!

    Palisade Investment Partners and Northleaf Capital Partners acquired a 75 percent share of the Waterloo wind farm in May 2013.

    In 2015 they purchased the remaining 25% and the development rights to the 6 turbine extension – Waterloo stage 2.

    “There will be no change to existing operations. Energy Australia employees will continue operating the wind farm and upholding our rigorous approach to safety and compliance,” Mr Garnsworthy said.”

    http://www.northernargus.com.au/story/2966518/energyaustralia-sells-remainder-of-waterloo/?cs=1491

    Waterloo WF was commissioned in late 2010 and so far has been owned by:

    Hydro Tasmania,

    Roaring Forties,

    TRUenergy (China Light and Power CLP),

    Energy Australia,

    Palisade Investment Partners and Northleaf Capital Partners

    One could be forgiven for thinking it might be a hot potato – just like Cape Bridgewater and Macarthur?

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