Got Money in the Great Wind Power Ponzi Scheme? Then, Grab it & Get Out Now!
The wind industry in Australia – as elsewhere – is in its death throes.
STT has likened it to the great corporate Ponzi schemes, pointing out, just once or twice, that the wind industry is little more than the most recent and elaborate effort to fleece gullible investors, in a list that dates back to “corporate investment classics”, like the South-Sea Bubble and Dutch tulip mania.
In the wind industry, the scam is all about pitching bogus projected returns (based on overblown wind “forecasts”) (see our posts here andhere and here and here); claiming that wind turbines will run for 25 years, without the need for so much as an oil change (see our posts hereand here and here); and telling investors that massive government mandated subsidy schemes will outlast religion (see our posts here andhere and here).
In Australia, one of the wind industry’s BIG players – Pacific Hydro – managed to rack up an annual loss of $700 million, last year; in circumstances where the subsidy scheme – on which its profits depend – hadn’t changed at all (see our post here).
Savers asked to wait three months for interest due on windfarm bonds that promised 7.5% annual return
29 July 2015
- Wind firm blames Tory green subsidy revamp for interest delay
- Business to be restructured in response to ‘attack’ on wind projects
- Savers bought four-year bonds for minimum investment of £500 each
Wind Prospect Group plans to delay interest payments to its mini-bond holders for three months, blaming a ‘sustained attack by the Conservative Government’ on onshore wind projects following the election.
Savers who lent money to the renewable energy company in 2011 via its four-year mini-bonds were promised 7.5 per cent annual interest, to be paid out in January and July every year, in return for a minimum investment of £500.
But bondholders wanting their capital returned this month are also set to wait an extra three months for the cash, as the company restructures its business in response to the Tories’ planned overhaul of green subsidies.
Unlike retail bonds, which are tradeable on the London Stock Exchange’s Orb markets, mini-bonds must be held to maturity meaning there is no exit route for investors who want to get out.
Savers are routinely warned to tread with care when buying any company bonds, because if you lend money to firms this way the money you make back depends on their financial strength – and ultimately on them staying in business.
Unlike with a savings account, you are not protected by the UK’s Financial Services Compensation Scheme, which guards against losses of up to £85,000 at present and up to £75,000 from next January.
The varying interest rates on retail bonds and mini-bonds reflect the amount of risk attached to them – generally speaking, the higher the rate on offer, the higher the risk.
There are fears that people who do not invest into a number of bonds may be putting too many eggs in one basket, as their investment is dependent solely on one company’s solvency.
But mini-bonds and retail bonds have proved hugely popular in recent years as the annual returns on offer attract savers struggling to generate a decent income from their nest eggs in an era of low interest rates.
These bonds are routinely oversubscribed, with offer periods often ending early because the fundraising target has been easily met or beaten.
Wind Prospect said that like most renewable energy companies in the UK, it had ‘reviewed its options’ following the election and the Tory ‘attack’ on onshore wind.
It further explained its actions in a statement that said: ‘In order to minimise the impact of government announcements for its ReBond holders, the business is proposing to separate its services business and development assets.
‘The existing UK and overseas development assets will then be ring fenced so that the proceeds from these are directly and contractually available to pay interest and repay capital going forward.
‘To achieve this, Wind Prospect has asked its bondholders to agree to a three-month moratorium on payments of interest and capital while the details are confirmed and a productive consultation can take place.’
Wind Prospect reportedly also delayed its January 2014 interest payment for a few days, but the company was unavailable to confirm this.
The spokeswoman who released its statement said: ‘We do not have any further comment to make at this time.’
People who invested in Wind Prospect’s four-year bonds in 2011 had to give notice last January if they wanted their capital returned to them this month, instead of just being given it back automatically.
Wind Prospect boss Euan Cameron said: ‘We are confident that the plan we deliver will be in the best interests of our bondholders and that these assets, many of which are projects outside the UK, have sufficient value to enable us to meet our commitments to bondholders in full.
‘This measure will significantly increase bond security as well as improve the strength of our service business and the services we provide to our clients. It will also ensure that our services business is robust and clearly defined as we embark on diversifying into new technologies and markets.
‘It is business as usual for the Wind Prospect team and we look forward to fruitful discussions with our bondholders over the next three months to reach the most positive outcome for all parties.’