Financially troubled wind firm Vestas, the largest wind turbine manufacturer in the world, has reached a new agreement with its bank lenders, which it says will be sufficient to support its business without the need for any new share issue. This is an oblique reference to what Vestas reports as ongoing talks with MHI. In August the two companies were in negotiations over a capital injection deal involving MHI's possible purchase of 10-20 % of Vestas' shares, although the discussions have not yet borne fruit.
The new agreement includes a revised €900m ($1.17bn) loan facility with the existing lender group of nine international banks, structured as a €250m amortising term loan and a €650m revolving credit facility. The revised arrangement will replace the current syndicated facility of €1.3bn. It has also agreed revised terms on amortising loans with the European Investment Bank for €200m and with the Nordic Investment Bank for €55m. The term loans are to be paid down by January 2015 and the revolving credit facility will expire at the same time, with an option to extend it for another two years. These revised facilities are considered to be sufficient to support the company’s current business model without the need for an equity issue. Expected cost cutting measures, factory divestments and an expected €275m–€775m in cash income for Q4 should be sufficient to manage through a difficult 2013, it says.
The terms of the revolving credit facility and the term loans are subject to final credit approval and documentation. Once this is completed, Vestas will have credit facilities of €1.155bn aa well as a corporate Eurobond of €600m due in March 2015. In addition, it is securing new project-related guarantee facilities, the company says.
Meanwile talks between Vestas and MHI over a strategic co-operation agreement are still going on. A deal with MHI would offer a number of advantages to Vestas, particularly in the growing offshore wind turbine market.
MHI would bring financial muscle, allowing Vestas to provide guarantees for capital expenditure on expensive offshore projects, while MHI's own wind turbine business, currently embroiled in an expensive patent dispute with GE, could in theory gain an opportunity to deploy machines based on Vestas designs. There is also speculation that a co-operative venture would enable the two companies to share technology and (according to a report by analysts Bloomberg) work on the development of an 8 MW offshore machine.
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