Sunday 20 October 2019

Greencoat Wind Farms Part 1 - Gortahile

Greencoat Renewables recently purchased Gortahile wind farm in Co. Laois for an undisclosed sum from a Dutch owned company Glennmont Clean Energy. It has been operating for about eight years and has a capacity of 20MW. It was originally built by German company ABO Wind, then sold to a Danish green fund, then repurchased by ABO for €42 million in 2010. It was also apparently owned by a French company at some stage. It is now back in Irish hands.

It's accounts for last year show it made a profit of € 288k but with gains on financial instruments, comprising interest rate swaps, making up about 45% of these profits. Like depreciation, these financial instruments are non cash items. To get a better look at the financial position of the wind farm, one needs to look at the cash flow statement.

The actual cash generated after paying interest was €1.5 million. The company repaid borrowers to the tune of € 2 million and so incurred a cash deficit of about half a million euros. However, they still showed total cash assets of € 2 million thanks to the waiver of a  € 3.6 million  parent company loan in 2017.

The wind farm's short term liabilities exceeded its short term assets by € 90k, which means it was unable to meet it's debts as they fell due.  The Dutch parent company had vouched it's willingness to provide enough income to keep the wind farm in operation till 2019. At the end of last year, it had combined losses of €2.3 million and debts of over € 18 million.

Will Greencoat need to prop up the wind farm with more cash? It remains a bit of a mystery why a wind farm in such difficulties has generated so many buyers but perhaps it's telling that the recent price tag was not disclosed.