Andrew Willis, October 27, 2008
Streetwise blog via Globe and Mail
For all the promise of alternative energy, small-cap companies in the capital-intensive sector are beginning to fail due to a lack of financing.
Less than a year after going public with a $140-million offering, analysts are predicted that wind farm operator EarthFirst Canada is about to turn out the lights. The company's market capitalization is now just $7-million, and EarthFirst has been unable to land new financing for projects that include a B.C. wind farm named Dokie I.
“The market appears to have priced in a liquidation value for the company,” said a note Monday from Scotia Capital analyst Ben Isaacson.
Back in August, EarthFirst announced that it was reviewing “strategic alternatives,” in other words, it was looking for a buyer, with Blair Franklin Capital Partners and GMP Securities as advisors.
“Two months have passed since the company announced its uncertainty to remain a going concern,” said Mr. Issacson on Monday. “To date, no refinancing deal has emerged that we are aware of. As credit and equity markets have deteriorated materially since then... we find it increasingly difficult to believe that a refinancing package for Dokie I will provide an acceptable economic return to shareholders.”
Shares in EarthFirst are changing hands at 7 cents on Monday, down from last November's IPO price of $2.25 each. GMP Securities and Scotia Capital led the IPO.
EarthFirst is attempting to replace a project financing loan package from German bank WestLB that expired in August. WestLB is one of several German banks that are likely to be recapitalized by the government.http://www.theglobeandmail.com:80/servlet/story/RTGAM.20081027.WBstreetwise20081027125658/WBStory/WBstreetwise
1 comment:
These articles make the epithets " greed" and "money men" often seen on anti-green energy sites seem sort of silly.
The truth is; wind developments are up front capital intensive. The major costs are seen during costruction with regular maintenance adding small ongoing expenses and interest and capital costs eating up most of the income . Fuel costs are zero.
The so called money men are ready to risk their futures on huge loans and willing to take small incremental percentages to provide green power.
Greedy bastards indeed.
John McManus
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