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United States

Wind project financing on hold -- ABB sells subsidiary

Further loans for wind projects are no longer likely to be forthcoming from ABB Energy Capital until the company resolves the future of its Structured Finance Group, now up for sale. "We like the wind sector," says John Harper from ABB Energy Capital. "But, currently we are not making any new commitments pending completion of the sale."

The financially troubled global engineering giant has been restructuring its businesses to reduce debt since July 2001. As well as drastically reducing its workforce, ABB's strategy also involves selling assets. The book value of the finance business assets could be as much as $4 billion.

Analysts have suggested, however, that if a buyer cannot be found, ABB might sell the leases and loans held by the financial subsidiary separately, a strategy that could break up the structured finance business and, perhaps, result in the demise of ABB Energy Capital. Harper declines to say whether offers are on the table for either the Structured Finance Group or Energy Capital.

Harper and his group financed a series of small wind turbine projects in the US last year with a combined capacity of 17 MW for Navitas Energy in Minnesota. Since May 2002, the company, which focuses on small to medium scale US wind projects, has provided nearly $24 million in long term financing for three projects, two in Minnesota and one in Colorado. In May, it arranged combined term loans of $3.8 million for Moulton Wind Power Partners LLC and Champepadan Wind Power Partners LLC, both developed by EnXco and Project Resources Corporation for Great River Energy. The projects use six Vestas 660 kW turbines in total.

As recently as last month, the Structured Finance Group announced $21 million in limited recourse term financing for Cynergy Global Power's 27.9 MW Peetz wind farm in north eastern Colorado, where 33 NEG Micon 900 kW turbines began generating electricity in October 2001 (Windpower Monthly, November 2001). ABB had earlier provided $34 million in construction financing for the project and this transaction involved converting that loan to a term loan.

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