NaiKun Wind Takes Steps to Sustain Offshore Wind Project, Announces Second Quarter Financial Results (Canada)
NaiKun Wind Energy Group Inc. (TSX-Venture: NKW) announced today that its Board of Directors (the “Board”) has initiated a process to retain an advisory firm to assist the Company in undertaking a review of the strategic alternatives available to ensure maximum shareholder value.
Since the recent announcement by BC Hydro that NaiKun Wind’s 396 MW offshore wind energy project was no longer under consideration in the Clean Power Call, the Board has been evaluating the potential for the project and the offshore wind industry in the context of renewable energy development in British Columbia. While the timing and specifics of BC Hydro’s near term procurement plans are uncertain in advance of the release of the Integrated Resource Plan that is required under the new Clean Energy Act, the Company believes that its project located in the Haida Energy Field off the east coast of Haida Gwaii can play an important role in BC’s future energy solutions.
The strategic review will encompass a careful assessment of alternatives including continuing to advance the offshore wind energy project as the Company’s primary project, potential business combination or joint venture opportunities in the renewable energy sector, the sale of the Company’s interests, among others. It is anticipated that the review will be completed in a timely manner. NaiKun Wind advises that no decisions have been made, no formal proposals received and no agreements reached regarding its assets, the Company or any subsidiaries. The Company cautions that there can be no assurance that the review of strategic alternatives will ultimately result in a transaction.
“We continue to believe that there are significant opportunities presented by the NaiKun Wind Project,” said Philip Hughes, Board Chair, “and with this in mind, the Board would like to fully explore all options available to optimize shareholder value.”
While the Company is facing a setback with regard to the offshore wind project, the Company has a number of significant assets which will be central to the evaluation of strategic alternatives, in examining how the company can leverage these assets to sustain the project and ensure maximum shareholder value. These assets include:
* A solid financial position, with no debt and $10.2 million of cash and equivalents (as at March 31st);
* A project at an advanced stage of development, including extensive engineering, environmental and site data collection and analysis which confirms a world class wind resource and the suitability of the site for the project;
* A strong team of world class suppliers and partners, including Siemens, ENMAX and north coast First Nations; and
* A provincial environmental certification which concluded that the project will have no significant environmental, social or health effects on the surrounding area.
The Company will also be undertaking further restructuring to dramatically reduce its cost structure to ensure that existing financial resources can support the development of the offshore wind energy project into 2014 and beyond. In addition, and as part of this restructuring, effective April 1, 2010, the Board’s fees were reduced by 50%.
“Projects of our scale and advanced degree of development are expected to be necessary to meet the Province’s energy goals, and in line with this, we are committed to taking steps to ensure that the project can be sustained over the long term,” said Paul Taylor, NaiKun Wind President and CEO.
While the strategic review is underway, NaiKun Wind will continue to work on the development of the wind project by completing the federal environmental assessment process which the Company expects to accomplish during the summer. NaiKun Wind will also continue to support the Haida as they finalize their deliberations regarding the opportunity to participate as an equity partner in the generation project.
NaiKun Wind also announced today its financial results for the latest quarter. During the quarter ended March 31, 2010, NaiKun Wind incurred a net loss of $1.42 million ($0.04 net loss per share), compared to a net loss of $3.29 million ($0.08 net loss per share) for the quarter ended March 31, 2009. The reported loss has decreased from the same period last year due to reduced development expenditures given that activities related to securing environmental approvals are largely complete. As at March 31, 2010, NaiKun Wind had $10.2 million in cash and cash equivalents, compared to $11.5 million at the end of December, 2009.
NaiKun Wind has prepared an assessment of the Clean Power Call process and the Clean Energy Act which is available on the Company’s website at www.naikun.ca
NaiKun Wind Energy Group Inc. is a British Columbia-based renewable energy company with offices in Vancouver, Masset and Skidegate. Once contracted, NaiKun Wind’s 396MW offshore wind energy project would generate enough energy to provide electricity to 130,000 B.C. homes and play a significant role in combating climate change. The project would bring high value jobs to the region during the construction and operating phases. NaiKun Wind is committed to working in partnership with First Nations and collaboratively with stakeholder groups and local communities in the development of its project. For more information on NaiKun Wind, please visit www.naikun.ca.
Source: naikun, May 20, 2010;