First Wind pulls stock offer; director sees little local impact

With declining prices for its stock offering, the company looking to site a wind farm near Oakesdale cancelled plans to trade its stock publicly last Thursday, Oct. 28.

First Wind, the Boston-based company, has applied with Whitman County to build a 55-turbine wind farm on Naff Ridge.

While investors balked at buying stock in the company, Ben Fairbanks, director of business development in First Wind’s west region, said the decision to pull back the public share offering means little for the Palouse Wind project.

“It really does not have any impact on any projects we’re currently developing or have planned to develop,” Fairbanks told the Gazette Tuesday.

First Wind first offered up its stock at $24 to $26 per share, but reduced that number Oct. 27 to $18 to $20 to attract buyers.

The higher-priced stock would have raised about $300 million, while the $18 shares would have raised $216 million.

Fairbanks said the company decided to pull the offer after deciding the money it would raise would not be worth the trouble of being traded on the open market.

“Once you go public, there’s a whole new set of regulations and standards,” said Fairbanks.

Had the company put its stock on the market, it would have become the first publicly-traded wind energy company.

First Wind filed a financial statement with the federal Securities and Exchange Commission that showed the company is carrying more than $500 million debt, has sold off most of its future revenue and is losing money.

“It’s a development business. So you put a lot of capital at risk,” said Fairbanks. “The structure is you procure turbines and they show up as debt until they’re up and running. Once you build a project, that debt goes off your balance sheet.”

First Wind’s debt load, he said, is high right now because the company is building wind farms in Maine, Utah, Hawaii and Vermont. First Wind currently operates 504 megawatts of wind farms across the nation.

Fairbanks compared the financing structure to the landlord business.

“You buy five houses, and they just sit there at first,” he said. “You don’t bring in any money until you start to fill them up and get renters in.”

That debt load should decrease on future projects, because the market for turbines has eased over the past four years.

Four years ago, wind farms were booming, said Fairbanks, and turbines were a rare commodity. Companies like First Wind had to buy turbines when they found them and sit on them until a project was ready to go.

Now, said Fairbanks, the number of manufacturers has increased while the number of wind farm developers has declined. That has lowered the cost of turbines, which will eventually reduce First Wind’s debt load, he added.

First Wind began the process to go public in 2008, hoping to raise $400 million. Steven Syre with the Boston Globe reported Friday that stock analysts had taken negative views of the company’s finances.

Local interest in investing in the renewable energy market is low, several local brokers said this week. Renewable energy is a relatively new market, which makes it less desirable for the typically conservative investors of the Palouse.

Syre reported Wall Street has taken a dimmer light on new energy companies, as federal tax credits for renewable energy may be eliminated at the end of the year and the demand for energy has fallen.

Fairbanks said the company’s financing is expected to remain solid even without the influx of cash from the stock market.

“Our track record has been pretty excellent compared to how other wind companies have weathered the credit crisis,” he said, pointing out First Wind has raised $2.5 billion in capital over the past two and a half years.