Flat Broke & Busted: German Wind Turbine Maker Senvion’s Spectacular Financial Collapse

Cut the subsidies and the wind industry would disappear in a heartbeat. The business model (read ‘colossal government mandated scam’) has all the hallmarks of an enormous Ponzi scheme – the wind industry’s demise is a matter of when, not if. The withdrawal of subsidies across Europe has taken its toll, as the number of new turbines erected plummets. Twelve countries in the European Union (EU) failed to install “a single wind turbine” last year.

Saddled with debt and peddling the world’s worst wind turbines hasn’t helped German turbine maker Senvion, either.

Its parent, the Indian outfit Suzlon suffered India’s biggest convertible-bond default in 2012 – was seriously struggling then and isn’t in any better shape now – even a name change to “Senvion” didn’t help.

In 2015, a debt-ridden Suzlon and struggling Senvion parted company, with a US firm, Centerbridge Partners throwing €1 billion at the wreckage in the hope some of it could be salvaged.

Four years on and it’s clear that Senvion was terminal.

Here’s a couple of pieces from Germany on only the latest renewable energy outfit to face total collapse. And the, oh so tragic ‘disaster’, has a run of serious knock-on consequences for wind farms and RE rent seekers here in Australia, as we’ll detail below.

Ailing Wind Turbine Maker Senvion Takes Step Toward Insolvency
Greentechmedia
Jason Deign
10 April 2019

The German manufacturer is on the ropes amid intense industry competition, and refinancing talks have so far come up short.

Shares in Senvion were in free fall Wednesday after the embattled German wind turbine maker announced it was entering a process called self-administration in a last-ditch turnaround attempt.

The Hamburg-based manufacturer said the move was to safeguard an ongoing transformation program “after refinancing discussions with lenders have so far not come to a positive conclusion.”

According to financial sources cited by Reuters, Senvion needs at least 100 million euros ($112 million) to remain afloat in the short term.

Germany’s self-administration law encourages financially stricken companies to declare insolvency early on, and thus increase the chances of a recovery, by allowing leadership teams to retain control of the business with oversight from a supervisor acting on behalf of creditors.

Senvion said it is initiating self-administration proceedings at both its main business and its German trading arm.

In a press statement, CEO Yves Rannou said: “We aim to use the self-administration proceedings to focus on restoring a profitable and sustainable business for our group [more rapidly]. We are in the process of discussing financing options.”

Investors flee

Shares tanked on the news, dropping 49 percent in 24 hours to less than €0.50 a share ($0.56). Senvion’s share price has fallen more than 95 percent in the last 12 months.

Senvion began a restructuring program in January, and Rannou said this week that the company still has “a fundamentally sound and strong business model.”

The company said it had appointed two insolvency administration advisers with “significant experience in successfully delivering self-administered restructuring programs” to work alongside the management team.

Senvion also said management has the support of creditors including major shareholder Centerbridge, the U.S.-based private-equity firm, which has pumped €82 million ($92 million) into the turbine business over the last nine months.

The company said it would continue with production, services, maintenance and customer support while refocusing operations and initiatives on particular markets, streamlining its product portfolio and looking for efficiency gains.

“Industry tension”

Aris Karcanias, co-lead of FTI Consulting’s Global Clean Energy Practice, said that while some of the issues facing the turbine maker were company-specific, it was also having to adapt to a “new normal” for wind’s original equipment manufacturers.

Industry competition has intensified over the past five years through the introduction of auctions, the consolidation of large manufacturers, the expansion of Chinese players internationally and challenges from solar and other generation technologies, he said.

“There is a genuine industry tension,” Karcanias commented. “Market access, really knowing your customers, and being able to continuously reinvent your technological portfolio whilst driving new service revenues [have] become critical to survival.”
Greentechmedia

German wind turbine maker Senvion files for insolvency
Reuters
Alexander Hübner, Michelle Martin
10 April 2019

FRANKFURT (Reuters) – A German court on Tuesday approved an application for insolvency from wind turbine manufacturer Senvion, although the company said it was also continuing to look at new funding options and various potential investors had shown interest.

The Hamburg-based company, which has more than a billion euros of debt, said it had applied for preliminary self-administration proceedings because refinancing discussions with lenders had not yet been successful.

Shares in Senvion were down 40.5 percent at 1519 GMT, having fallen as much as 55 percent earlier in the day.

Senvion has faced delays and penalties related to big projects, while the wind industry as a whole has seen falling prices and increased competition as it moves away from governments guaranteeing generous fixed subsidized tariffs for power toward an auction-based system that favors the lowest bidders.

Market leaders Siemens Gamesa and Vestas have more pricing power, putting smaller suppliers under pressure.

Financial sources had told Reuters Senvion needed at least 100 million euros ($112 million) in the short term to keep operating.

“Lenders and major bond holders are currently continuing intensive discussions around a financing offer to secure the continuation of operations which may allow the company to successfully exit this process,” Senvion said in a statement.

Two financial sources said hedge funds Anchorage and Davidson Kempner were prepared to put up the 100 million euros in loans that CEO Yves Rannou – who took the helm in January – needs to continue restructuring and clear the backlog of orders that has recently cost the company revenues and profit.

The sources said majority shareholder Centerbridge was prepared to accept that but the banks – notably Deutsche Bank and BayernLB – would still need to agree. The banks have lent Senvion a total of 950 million euros.

BayernLB and Deutsche Bank declined to comment.

Senvion also has 400 million euros in bonds bought by hedge funds including Anchorage and Davidson Kempner.

Senvion said its management board would remain in office under the initiated procedure and business operations would carry on, with both existing service and maintenance contracts continuing.

The company said the preliminary self-administration proceedings affected Senvion GmbH and a subsidiary called Senvion Deutschland GmbH. It said Senvion S.A., Senvion Topco GmbH and Senvion Holding GmbH were expected to file for insolvency later this week.

Senvion’s website says it has around 4,000 employees globally.
Reuters

Now to the Australian fallout, with this lament from the team over at ruin-economy.

Australian wind project owners worried as Senvion faces insolvency
Reneweconomy
Sophie Vorrath
12 April 2019

German wind turbine maker Senvion has entered what it describes as “self-administration proceedings” as the company struggles with debt, delays to projects and increased market competition from its major rivals.

The situation has raised concerns for projects and workers in Australia using Senvion technology, or where it is the contractor, including the 212MW Lincoln Gap wind project near Port Augusta in South Australia and the huge Murra Warra development in Victoria.

In Australia, Senvion has installed more than 470MW of wind energy generation, with a further 430MW under construction as at September 2018.

For its completed projects, Senvion also has full-service agreements for all of these wind farms. A spokeswoman said in a statement: “Senvion Australia is working closely with wind farm owners and contractors to ensure that we can continue to safely deliver and operate wind farms in Australia.”

The Hamburg-based company says it had come to the decision to take the action after refinancing discussions with lenders had “so far not come to a positive conclusion.”

The company said the move was supported by the company’s main shareholders, lenders and major bond holders, and day-to-day business operations would continue as normal, with the goal of full recovery.

“Although we could not yet win some breathing space through a financial restructuring, Senvion has a fundamentally sound and strong business model. Together with all our teams, the management and I are implementing measures to return the company to economic stability,” said CEO Yves Rannou.

“By entering the preliminary proceedings under self-administration, we aim to gain the flexibility and speed required to press ahead with the initiated transformation program. We are in the process of discussing financing options. If successful, we may be able to exit the initiated process successfully.”

According to Reuters, financial sources say the company needs at €100 million ($A158 million) in the short term to keep operating.
Reneweconomy

 

Lincoln Gap (just to the west of Port Augusta in SA) is touted as the latest thing in wind farms, with claims that it will have a bigger-than-Ben-Hur battery to account for the weather – ie the fact they can only ever deliver power around 30% of the time and at crazy, random intervals. The project was meant to comprise 59 turbines. However, at last count there are only about 8 or 10 that look anything like complete. With Senvion’s sudden and monumental collapse the chances of completing the balance of the project now, look pretty thin.

Adding to our sense of delicious schadenfreude is the fact that the one of the key financial backers of Nexif (the firm that owns the part finished project) is the one and only Alex Turnbull. Alex is the son of Malcolm, the Liberal PM dumped by his party for his renewable energy obsession.

Alex’s relationship with the embattled wind power outfit, Infigen is the stuff of legend: Born Lucky: Stars Align Perfectly for PM’s Son with Mammoth Bet on Wind Power Outfit Infigen

As to the Singapore based Nexif and its stalled Lincoln Gap project, STT understands that Turnbull & Son went to great lengths to secure a power purchase agreement with Snowy Hydro to finance the project, along with a pile of cash from the Federal government’s Clean Energy Finance Corporation. Another case of it’s not what you know, it’s who you know.

Well, it seems that this is one that Daddy can’t fix in a hurry. Oh dear, how sad, never mind.