In search of equity for growth -- French and Spanish merger

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The Franco-Spanish wind farm developer and operator La Compagnie du Vent has merged with its associated French wind design, engineering and consultancy firm Cabinet Germa to boost the combined capital of the two firms. La Compagnie du Vent is now 50-50 owned by Jean-Michel Germa and by Spain's dominant wind project developer, Energia Hidroeléctrica de Navarra (EHN).

The transformed La Compagnie du Vent hopes to take a dominant position in the expanding French market by being able to plan, build and operate wind farms without the need for outside contractors or partners. It will see an immediate increase in its capital from EUR 1.5 million to EUR 15 million and is expected to announce a turnover of EUR 7.5 million for 2002, growing to a EUR 360 million turnover by 2010. The company's long term aim is to capture 15-20% of the global wind market by 2010 (the equivalent of installing 1500-2000 MW) at a cost of EUR 250-300 million a year.

Jean-Michel Germa, one of the leading pioneers of French wind power and president of the French Wind Energy Association (FEE), set up Cabinet Germa in 1981. It was an instrumental part of the consortium which built Africa's first wind farm, the 50.4 MW wind farm at Koudia Al Baida in Morocco. La Compagnie du Vent, based in Montpellier, was created in 1991 and formerly known as Tramontana. It has dominated the French wind scene since then and merged with EHN in the late 1990s to increase its equity.

The merger of La Compagnie du Vent and Cabinet Germa had a practical as well as financial dimension. "La Compagnie du Vent just owned wind farms," explains Germa. "It didn't have any staff. All the work was done by the staff of Cabinet Germa."

La Compagnie du Vent operates almost 20 MW of wind plant, about 30% of France's wind capacity: 8.8 MW at Corbieres-Maritimes, the successor to Port-le-Nouvelle; 5.64 MW at Roquetaillade, south of Limoux; and 3.3 MW at Plouarzel in Brittany. The inauguration of the 15.84 MW Grande Garrigues wind farm in September will almost double La Compagnie du Vent's share of the French market and more wind farms are planned. France intends to expand capacity to 10,000 MW by 2010 to meet its climate change obligations under Kyoto and the goals of the EU directive on renewables.

This will not be the last of the changes at La Compagnie du Vent. A financial restructuring of the company is envisaged for 2003. "If we want to reach the goal we have set ourselves we are going to need a lot more money," says Jean-Michel Germa. "The merger won't provide enough equity. We are looking at different ways to achieve this. We could float part of the company or look for a third party investor: a financing partner, not a technical partner. Or we could do both."

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