CWP Clipper Reg S

 

TIDMCWP 
 
RNS Number : 9424S 
Clipper Windpower Plc 
20 September 2010 
 

 
 
                              For Immediate Release 
____________________________________________________________________ 
 
                CLIPPER WINDPOWER PLC - FINANCIAL TRADING UPDATE 
 
London, (UK), Carpinteria, CA (USA) - September 20, 2010 - Clipper Windpower Plc 
(the "Group," "Clipper," or the "Company") expects to release its interim 
financial statements on September 30, 2010.  This RNS is an update of expected 
reported results and financial condition as of June 30, 2010, plus additional 
disclosure relating to potential corporate transactions or financings. 
 
Financial Summary 
 
Revenue for the six months ended June 30, 2010, is expected to be in the range 
of $150 to $154 million, primarily from the sale of 43 turbines, compared to 
revenue for the six months ended June 30, 2009, of $357.3 million, primarily 
from the sale of 127 turbines.  In the current period, turbines were delivered 
to three separate customer sites in the United States and Mexico.  Revenue for 
the first half of 2010 is in line with management projections that anticipated 
lower volume in the first half of 2010 as compared to the same period in 2009 
and lower revenues in the first half of 2010 compared to the second half of 
2010. 
 
The net loss for the six months ended June 30, 2010, is expected to be in the 
range of $26 to $30 million compared to a net loss of $120.2 million for the six 
months ended June 30, 2009.  Results include net remediation and warranty 
related costs, for the six months ended June 30, 2010 and 2009 of approximately 
$20 to $24 million and $69.8 million, respectively. 
 
As indicated in previous guidance, Clipper expects to deliver against firm 
orders in the range of 140 to 180 turbines (350 to 450 MW) to customers in 2010. 
Deliveries are likely to be at the lower end of the range pending confirmation 
of customers' project schedules. 
 
 The Liberty turbine is delivering sound performance with fleet-wide 
availability averaging over 95% year to date and exceeding 97% over the past two 
months. The fleet now totals over 1,190 MW of capacity installed and operating, 
at 18 generating sites across the U.S. and Mexico, and consisting of 477 Liberty 
turbines with over 5.3 million accumulated operating hours. 
 
Clipper's past inability to provide customers with turbine warranty coverage 
that is perceived to be consistent with top tier turbine manufacturers has been 
a significant factor in the lack of new turbine sales. A major breakthrough in 
this regard has been implemented with the recently finalized agreement for 
United Technologies Corporation ("UTC") to provide warranty support.  This, 
coupled with Clipper expanding its marketing efforts into numerous countries and 
emerging markets outside the U.S., has resulted in active proposals for 1,750 MW 
of turbines and an additional 2,750 MW of proposals in process. The broader 
marketing and sales efforts include a relationship with UTC's Pratt & Whitney 
Power Systems ("PWPS") to enable Clipper to leverage the PWPS global 
distribution network to sell and service the Liberty turbine and to provide 
integrated turnkey project capabilities to turbine purchasers. 
 
U.S. Wind Market and Liquidity 
 
The global economic and credit crisis has materially impacted the availability 
of financing for wind projects, causing many of the Company's customers to 
reduce capital expenditures, delay projects, and defer turbine deliveries under 
existing contracts. Further, in the U.S., project developers and electric 
utilities dramatically reduced new orders for turbines and the lower energy 
prices for oil, natural gas, and coal have contributed to lower prices for power 
purchase agreements. These conditions now appear to be stabilizing at reduced 
levels from recent years. 
 
The Group expects to face significant liquidity strainwithin the next yeardue to 
lower receipts of deposits and progress payments from customers under new and 
existing orders, in comparison to the operating cash needed to complete these 
orders and fund operations. 
 
The Company has historically met its operating capital requirements with equity 
capital provided by institutional investors and from deposits and progress 
payments made by customers on contracts for future turbine deliveries.  The 
Group has only $20 million of funded debt, but has significant obligations to 
(i) its customers under agreements for future deliveries and warranty and 
performance obligations; and (ii) its vendors and suppliers for services 
performed and for components purchased. 
 
The Group's consolidated cash position of $140 million at June 30, 2010, has 
decreased to approximately $86million as of the end of August 2010 due to 
continued cash requirements to fund the operating and capital needs of the 
Company, including increased purchases of components for the manufacture of 
turbines scheduled for delivery in the current year. 
 
Potential Financing Transactions 
 
In addition to aggressively broadening its marketing and sales reach to markets 
outside the U.S., the Group has been actively seeking additional sources of 
capital. The Group is exploring numerous alternatives to raise capital including 
private and public equity issuances and working capital credit lines with 
certain financial institutions as well as its largest shareholder, UTC. 
Discussions with UTC are ranging from providing credit support for a working 
capital line to equity purchases. During these discussions, UTC submitted to 
Clipper a non-binding indication of interest to acquire all of the ordinary 
shares of the Group not currently owned by UTC.  The indication of interest was 
conditional on completion of confirmatory due diligence and additional terms and 
conditions.  The Board comprising the non-UTC Directors ("Non-UTC Directors") 
has retained both financial and legal advisors to fully advise the Non-UTC 
Directors on strategic and financing options for the Group, including any 
potential transaction with UTC. 
 
The subscription agreement between Clipper and UTC entered into in January 2010 
(under which UTC invested $207 million into Clipper) contains standstill 
provisions that generally limit UTC to a 49.9% shareholding until January 2012. 
In certain events, UTC is permitted to increase its shareholdings to 55%. In 
mid-September, UTC provided notice to Clipper that based on cumulative cash 
outflows, which they calculate have exceeded the level permitted in the 
subscription agreement, UTC and its affiliates are thereby allowed to increase 
their combined shareholding in Clipper to 55%. 
 
The Company's management has provided due diligence materials requested by UTC 
and will continue engaging in negotiations with UTC to determine whether a 
financing transaction or acquisition proposal can be arranged on acceptable 
terms. There is no assurance, however, that these discussions will result in a 
proposal that the Non-UTC Directors believe is appropriate to recommend to the 
Group's shareholders. The Group will also pursue other initiatives and believes 
that it will be possible to reach agreement with UTC or another party on the 
terms of a possible offer or new financing arrangements.In any event, there is a 
high probability that the Group will not be in a position to announce new 
financing arrangements or the terms of a recommended offer for the Group before 
the announcement of the Group's interim financial statements on September 30, 
2010. 
 
In expectation of a positive outcome of the financing discussions, and/or 
significant new customer orders and deposits, management has prepared operating 
plans and projections to reasonably ensure the Group has adequate resources and 
operating flexibilities.  The principal sources of projected cash inflows are: 
continued receipts from customers on existing turbine contracts (both for 
delivered turbines and turbines slated for future delivery); and sales of one or 
more development sites.  The Group maintains an ongoing dialogue with existing 
customers to ensure that contractual payments from customers are received in a 
timely manner and, in situations where payments are dependent on other 
activities, that such activities are tracking to plan.  The Group is in advanced 
negotiations for sales of one or more development assets, including related 
turbine sales agreements. However, until transactions are completed, there can 
be no assurance as to the terms and timing of such transactions. 
 
Without the announcement of an agreement on a substantive new financing 
transaction by September 30, 2010, the Company expects to disclose within the 
interim financial statements an opinion that the current business circumstances 
create a material uncertainty that casts significant doubt on the Group's and 
the Company's ability to continue as a going concern and, therefore, that it may 
be unable to realize its assets and discharge its liabilities in the normal 
course of business.  However, in light of the ongoing active discussions with 
UTC and other institutional capital providers, and after making enquiries, 
reviewing forecast cash flows and considering the uncertainties described above, 
the Non-UTC Directors have a reasonable expectation that the Group and the 
Company have adequate resources and operating flexibilities to continue the 
business for the foreseeable future. Therefore, the Group intends to continue 
preparing its financial statements on a going concern basis. 
 
This press release contains statements about the Company that are or may be 
forward looking statements. All statements other than statements of historical 
facts included in this press release may be forward looking statements. Without 
limitation, any statements preceded or followed by or that include the words 
"targets," "plans," "believes," "expects," "aims," "intends," "will," "may," 
"anticipates," "estimates," "projects," or words or terms of similar substance 
or the negative thereof, are forward looking statements. Forward looking 
statements include statements relating to the following: future capital 
expenditures, expenses, revenues, earnings, synergies, economic performance, 
indebtedness, financial condition, losses and future prospects, financing 
arrangements, business and management strategies and the expansion and growth of 
the Company's operations and potential synergies between the Company and UTC . 
 
Such forward looking statements involve risks and uncertainties that could 
significantly affect expected results and are based on certain key assumptions. 
Many factors could cause actual results to differ materially from those 
projected or implied in any forward looking statements. Due to such 
uncertainties and risks, readers are cautioned not to place undue reliance on 
such forward looking statements, which speak only as of the date hereof. The 
Company disclaims any obligation to update any forward looking or other 
statements contained herein, except as required by applicable law. 
 
All subsequent written and oral forward looking statements attributable to the 
Company or persons acting on the Company's behalf are expressly qualified in 
their entirety by the cautionary statements above. The forward looking 
statements included herein are made only as of the date of this press release. 
The Company does not intend, and does not undertake any obligation, to update 
these forward looking statements. 
 
Goldman Sachs International, which is authorized and regulated by the United 
Kingdom by the Financial Services Authority, is acting exclusively for Clipper 
Windpower and no one else in connection with the possible offer and will not be 
responsible to anyone other than Clipper Windpower for providing the protections 
afforded to clients of Goldman Sachs International nor for providing advice in 
connection with the possible or any other matters referred to in this 
announcement. 
 
JP Morgan Cazenove, which is authorized and regulated by the United Kingdom by 
the Financial Services Authority, is acting exclusively for Clipper Windpower 
and no one else in connection with this announcement and will not be responsible 
to anyone other than Clipper Windpower for providing the protections afforded to 
clients of JP Morgan Cazenove nor for providing advice in connection with the 
matters referred to in this announcement. 
 
About Clipper 
Clipper Windpower Plc, www.clipperwind.com, is a company engaged in wind energy 
technology, turbine manufacturing, and wind project development.  The Company 
designs advanced wind turbines, manufactures its 2.5 MW Liberty wind turbine, 
and actively develops wind power generating projects in the Americas and Europe. 
Clipper's headquarters are in Carpinteria, California, USA.  The Company's 
330,000 square foot manufacturing and assembly facility for land-based wind 
turbines is located in Cedar Rapids, Iowa; its development center for offshore 
wind turbine development is located in Blyth, UK.  Clipper is a public company 
listed on AIM of the London Stock Exchange. Clipper's ticker symbol is CWP. 
 
The ordinary shares of Clipper Windpower Plc are traded on AIM of the London 
Stock Exchange and are not registered under the U.S. Securities Act of 1933, as 
amended. Such shares may not be offered or sold to residents of the United 
States or to persons acting on their behalf, or to other persons who are "United 
States Persons" within the meaning of Regulation S as promulgated under the 
Securities Act of 1933, unless such shares have been registered under the 
Securities Act or there is an available exemption from registration. 
 
 
For further information, please contact: 
 
INVESTORS 
 
Clipper Windpower Plc 
Jenny Matthews 
Investor Relations 
Tel: +44 (0)7827 259495 
 
Goldman Sachs International (Financial Adviser to Clipper) 
Brian Bolster / Nick Harper 
Tel: +1 212 902 2649 / +44 (0)20 7774 1000 
 
J.P. Morgan Cazenove (Nominated Adviser and Corporate Broker to Clipper) 
Patrick Magee / Jamie Riddell 
Tel: +44 (0)20 7588 2828 
 
FINANCIAL PRESS 
 
M:Communications 
Patrick d'Ancona / Charlotte Kirkham 
Tel: +44 (0)20 7920 2347 
 
BUSINESS AND TRADE 
 
Clipper Global Communications 
Mary Gates 
Tel: +1 661 301 0400 
 
 
## 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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