Success of First Wind’s $300 million IPO is up in the air

Success of First Wind’s $300 million IPO is up in the air

Wind farm developer First Wind Holdings is planning a $300 million IPO this week. But with a large debt load and choppy cleantech IPO waters, it’s unclear how well the stock offering will fare.

The company plans to offer 12 million shares between $24 and $26. At the mid-point of that range, First Wind’s market value would be $1.2 billion, according to Renaissance Capital. It remains to be seen whether First Wind can land within that range, though. Recent cleantech IPOs like smart meter company Elster and biofuel company Amyris all debuted below planned ranges.

Indeed, it looks like the prospects are sketchy for First Wind, which has lost $233 million and $582.2 million in debt. The company says it does not have enough cash to cover that loss and is at default risk, Reuters reported.

Of the $300 million it hopes to raise in the IPO, $98 million will go towards debt service, and $78 million of that will go to retire a loan that has a 17 percent annual interest rate and matures in March 2013.

First Wind is backed by D.E. Shaw and Madison Dearborn and had $75 million in sales in the last year. It will list on the Nasdaq under the ticker symbol WIND, and the lead underwriters on the deal are Credit Suisse, Morgan Stanley and Goldman Sachs.

The company has hefty expansion plans, which is presumably needs the new capital to support. By 2014, First Wind plans to have 1,900 megawatts in operation or under construction. But a key wind production tax credit expires at the end of this year, and the American Wind Energy Association warns that the future of the wind industry depends on the measure’s renewal. The association also told Reuters that new U.S. wind installations were down 71 percent in the first six months of 2010.

Wind energy has had its share of struggles. It’s an intermittent energy source, and companies are searching to find solutions for transmitting the energy wind farms produce. Pattern Energy, for example, has proposed a 400-mile wind transmission line to bring the ample wind energy from West Texas to other southern states. And Google recently became a key investor in the initial phase of what will become a multi-billion-dollar effort to build a transmission line for offshore wind farms on the Atlantic coast.

Wind blows more strongly at night and more steadily offshore, but utilities and wind companies must figure out how to harness that energy for use during peak hours — whether that’s storage solutions (which are still technologically far off), new transmission lines (which companies like Oncor are building) or more sophisticated management of energy dispatch. As a whole, the industry faces issues that go beyond the smart grid and instead require the development of GreenBeat likes to call the “super grid” — a topic that will be discussed at the GreenBeat 2010 conference next week.

Massachusetts-based First Wind develops, owns and operates wind farms in the northeast and west U.S. and in Hawaii. The company says it’s currently producing 504 megawatts of energy through seven wind farms and developing other projects through subsidiary wind farms, with another 268 megawatts of capacity planned to be in operation or under construction by the end of this year.

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About the Author, Iris Kuo

Iris Kuo is the VentureBeat's lead GreenBeat writer. She has reported for The Wall Street Journal in Hong Kong, Houston Chronicle, the McClatchy Washington Bureau and Dallas public radio. Iris attended the University of Texas at Dallas and lives in Houston. Follow Iris on Twitter @thestatuskuo (and yes, that's how you pronounce her last name).

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Comment by Harrison Roper on October 26, 2010 at 4:14pm
The article quotes First Wind as claiming to "currently produce 504 Mw of energy". Surely, that is not an accurate statement of the situation. More accurately it would be: "currently we have 504 Mw of installed capacity, and the average output for the past year has been......'
Come on, First Wind. Everybody who looks out the window knows the wind does not blow all the time. How much power have you actually been producing? Why don't you tell us?

Harrison Roper Houlton, ME
Comment by alice mckay barnett on October 26, 2010 at 8:13am
did I not read where first wind falsified grant applications? one can only hope that first wind fails.
thaks again long islander, brad blake and others for the daily grind. Some days we feel all alone. Yet I know we are not.
Comment by Long Islander on October 26, 2010 at 5:42am


Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power


Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT


(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.”

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We have the facts on our side. We have the truth on our side. All we need now is YOU.

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

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