Lerdal says wind is not in its plans. While the corporation still owns what's left of Kenetech Windpower, the only benefits it expects from the bankrupt company are continuing tax write-offs.
Kenetech Corp pulled itself from debt through the sale late last year of its share of the EcoElectrica Project, a gas fired power plant in Puerto Rico, to Edison Mission Energy, netting $212 million. This comprised most of the company's income for 1998 and put it into the black. It had a capital reserve of $31.4 million and a deficit of $116.5 million at 1997's end.
The company also sold off a 17.8 MW wood fired power plant in upstate New York. The deal netted the company an additional $2.3 million after settling its debts. In March the company was even able to pay a $4.18 dividend to holders of the company's preferred stock, or about $21.4 million in total.
Kenetech's rebound has attracted the interest of at least one outside investor. A company called Campus LLC has offered to buy two million of the company's 45 million shares for $600,000, or $0.30 a share. Kenetech management believes the stock is worth more than that and is advising shareholders to reject the offer. Management claims the working capital alone is worth $0.80 a share. Kenetech stock has traded as high as $0.41 a share in 1998. In 1999 its peak so far ist $0.26.
Company managers believe the "common stock is undervalued in the market" and are concerned about "unfair takeover tactics." As a way to protect Kenetech from a hostile takeover, they have proposed creating a new "Series A Junior Participating Preferred Stock" which, "under certain circumstances," would enable the holder to buy shares of Kenetech's common stock at half of their market value. Current shareholders automatically receive this option, making it difficult for any outside buyer to make a surprise takeover.
The company's troubles are not over yet, however. The holding company and its subsidiaries are defendants in at least seven law suits, including a lingering class action suit that claims Kenetech "misrepresented the company's progress on the development of its latest generation of wind turbines and the company's future prospects" (Windpower Monthly, November 1995). After two unsuccessful attempts at mediation and one unsuccessful settlement conference, the class action trial is going forward, though no date has been set.