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United States

Sany caught up in further US litigation

UNITED STATES: Sany subsidiary Ralls Corp is once again embroiled in a legal dispute in the US after it claims a developer defaulted on a project loan.

The project features Sany 2MW turbines
The project features Sany 2MW turbines

Ralls gave New Centennial Power a loan of $13.4 million for the development of the 8MW Huerfano River project in Colorado.

Of this, $8.8 million was used to purchase four Sany 2MW turbines, which were installed at the now-operating project.

However, a loan condition stated that once construction costs of £3.5 million had been laid out by the developer, it would have to pay an "acquisition cost" of $1.1 million.

A case filed at the District Court of Georgia claims that New Centennial has failed to pay back this money.

When contacted by Windpower Monthly a Ralls spokesperson said that the company had been in discussions with the developer for "several months", but New Centennial appeared "unable to pay".

The project has been operating since October and supplying power under a power purchase agreement (PPA) with San Isabel Electric Association.

Ralls holds that the loan conditions mean that any revenue from the PPA should be paid into a bank account mutually administered by the two companies.

New Centennial and its owner Jerry Zhang has failed to do this and is using the revenues for "purposes other than the repayment of the loan", according to the court documents.

Windpower attempted to contact New Centennial but was unable to get a comment. The company's website lists the total project cost at $17 million and is still offering shares in the project promising an 8.9% return.

There is a promise that federal subsidies in the form of investment tax credits to the amount of $4.8 million will be paid directly to investors.

This is not the first time that Ralls has been caught up in legal proceedings in the US.

The company has been battling a 2012 decision by president Barack Obama to block the construction of four 10MW wind farms near a US naval base in Oregon on national security grounds.

However, in October last year, a federal judge ruled that Obama followed proper procedure when blocking the projects, thereby ending Ralls' legal recourse.

Ralls said it has suffered direct losses of $20 million due to the decision.

In light of the decision, Ralls said in 2012 that it would not expand in the US as it had planned. But earlier this month, the company bought a 20MW project in Texas, seemingly reversing this decision.

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