First Wind Retreats, Shelves IPO Plans
Facing a dubious IPO and downward pricing pressure, First Wind announced on Thursday that it will put its plans to go public on hold.
The wind energy company, which first signaled its intention to go public way back in 2008, was expected to IPO this week but several analysts and media reports questioned investor demand, citing a heavy debt load, a lack of profitability and broader challenges in the sector.
Amid growing concern, the company dropped its pricing forecast to $18 to $20 on Wednesday— a 25% cut from its previous range of $24 to $26. Now, after shaving its expectations, First Wind is pressing pause on the entire IPO and has not indicated when it will resume plans to go public.
“The terms that the IPO market was seeking at this time were not attractive to the company,” the company’s CEO Paul Gaynor said in a statement, according to reports.
The cleantech IPO market has been pretty choppy this year, especially for companies that are seen as heavily dependent on government subsidies. On Thursday, Enel, a major European utility company, lowered its price range for the upcoming IPO of its green unit (Enel Green Power) in a bid to attract larger, institutional investors. The new range is now at €1.60 to €2.10 euros from €1.80 to €2.20. This is Enel’s second price drop.
First Wind, which owns and operates wind farms in the U.S., was hoping to raise cash in the IPO to ease its large debt load. As outlined in a recent S-1 filing, the company still has $582.2 million in outstanding debt. Moreover, since its inception the company has racked up $233.0 million in losses. Cognizant of its debt and ongoing losses, the company warned investors that “our substantial indebtedness [could] make it difficult for us to satisfy our obligations with respect to our indebtedness, and failure to comply with these obligations could result in an event of default under those agreements, which could be difficult to cure, or result in our bankruptcy.”