Wind Today - Q2 2008 - (Page 60)

T echnical Raising Project Funds Through Private Placements The following article is based on a presentation made by wind energy lawyer, Thomas J. Timmins of Dale & Lessmann LLP (416-3697821), Toronto, ON, at the CanWEA Conference and Exhibition held Sept. 30-Oct. 3, 2007 in Quebec City, Canada. Private equity financing is one of the principal means of raising funds directly for a wind energy venture. Despite the recent downturn in the public equity markets, a strong company with good business fundamentals and a viable business concept can still source capital in the private equity markets. The key for wind energy developers is to begin planning for investment from the very beginning. Private Equity Private Equity The term “private equity” tends to be used by investment participants as a catch-all for equity and subordinated debt investments in non-publicly traded companies. For lawyers, private equity specifically refers to securities issuances that occur legally, but without the issuance or filing of a prospectus. Desirable Characteristics Desirable Characteristics Private equity underwiters look at the following characteristics of a business before accepting a mandate to raise capital: Management Team. Investors and underwriters will look for industry experience, strong technical bench strength, industry contacts, and a depth of business experience in the prospective management team. Business Concept. Private equity investors who invest in start-up ventures want to know they are investing in a 60 whether the proposed investment is company with a good chance of succeedviable and marketable to investors. ing. They look for superior return on Experienced Counsel. Laws impactinvestment and will want to hear a ing private placements change frecompelling business story that offers a quently and are regularly interpreted by unique business opportunity, preferably the courts. Since securities issuances are with well-understood barriers to entry, highly regulated, they can be fertile or the prospect of becoming a dominant ground for litigation. player in a high growth industry. Knowledgeable legal counsel Liquidity Horizon. Venture investors want to know that future Wind power development ventures liquidity prosseeking capital in private equity pects have been considered. Has markets should begin planning for there been investment from the very beginning. interest shown by potential upexperienced in private equity placement stream purchases? Does the business can make transactions more efficient, and model show cash flow growth so minimize risk for the issuer, the issuer’s substantial that a public securities management team, and early investors. offering and/or investment payback in Basic Financial Package. The the form of dividends would be company’s most recent financial staterealistic within a reasonable time horizon? ments, including a balance sheet and an income statement need to be in order. Cash-flow projections and/or models Planning In wind energy, the exploration and showing where the capital raised will go development phases are followed and how money is expected to flow into quickly by large-scale capital needs. and out of the company will help Each stage of project development is propective investors determine whether heavily dependent upon the foundaor not the investment meets their criteria. tions laid at an earlier stage. Team Members. Who serves on the In order to gain access to private management team and the Board of capital markets, wind energy developDirectors will have a significant impact on ers need to consider the following early whether or not the venture is a success. in the development process: Underwriters will want to review Compelling Business Plan. A clear executive biographies, compensation and compelling business plan is often a packages, non-competition covenants, prerequisite to winning an initial meeting option plans, and share ownership with an underwriter. The underwriter or structures. These documents may securities advisor representing the indicate whether the right individuals prospective developers will normally are dedicated to the venture, reasonably review this document to determine well compensated, and incentivized to WIND TODA Y Second Quarter 2008

Table of Contents Feed for the Digital Edition of Wind Today - Q2 2008

Wind Today - Q2 2008 Contents WINDPOWER 2008 - Host City - Houston WINDPOWER 2008 Special Events CanWEA 2008: Fast Forward to Wind Global Wind Plant Ownership Top 15 States with Wind Energy Installed Ranking the Percentage of State Electricity from Wind Largest Wind Farms in the United States Owners with the Most Wind Power Assets in the United States Rick Perry Bluegrass Ridge, Cow Branch, and Conception Wind Farms Loess Hills Wind Farm Bob Emick enXco V and enXco V Repower Climb Assist Devices GWEC Market Forecast Ports of Entry Satisfy Customers WINDPOWER 2008 Schedule Calendar Seven Principal Financing Structures Used in Utility-Scale Wind Projects Raising Project Funds Through Private Placements The Minnesota Flip Business Model Wind Resource Glossary WT Transmission Corn Plus Coop Adds Wind Energy Wind Resource Maps Ryan Orban, Iberdrola Renewables Liz Cussans, TransAlta Wind Bolton & Menk Trachte Port of Corpus Christi NPPD Interstate Truck Rental & Sales Dr. Shrink Aldridge Electric HYTORC Product Surveys Ad Index

Wind Today - Q2 2008

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