SkyPower's troubles stem from the financial collapse of its majority stakeholder Lehman Brothers, a casualty of the subprime mortgage crisis forced last September to file for bankruptcy protection.
"We have been trying for the past 10 months since the bankruptcy of our majority shareholder to restructure outside a court process with our German-led banking syndicate, without much success," SkyPower chief Kerry Adler said in an email message to the Star.Lehman's owned 82 per cent of SkyPower before filing for bankruptcy.
SkyPower isn't the first developer to hit rough times. In November, Calgary-based wind developer EarthFirst Canada filed for creditor protection, citing an "unprecedented crisis in the global financial markets.
" A tight credit market, combined with the capital-intensive nature of wind and solar projects, has left many developers in limbo.
The Toronto-based SkyPower, founded in 2003, has accumulated more than $250 million in debt and can no longer meet repayment obligations. The largest part of that debt is a $213.9 million loan from a syndicate led by HSH Nordbank AG of Germany. SkyPower used the money to purchase 134 General Electric wind turbines in late 2007.
SkyPower defaulted on the loan in March and HSH, after granting several extensions, drew the line in late July. "SkyPower does not have the funds to meet its liabilities as they come due and is insolvent," Adler said in an affidavit.
SkyPower is active in Ontario and in wind and solar projects. In January, it was awarded a 20-year power purchase agreement with the Ontario Power Authority for its 64.5 megawatt Byran Wind Project in Prince Edward County.
Its First Light solar project, a partnership with U.S. solar developer SunEdison, is being constructed in Lennox and Addington County north of Kingston. At 9 megawatts, it will be the first multi-megawatt solar farm in Ontario when finished this fall.
For now it's "business as usual," and the filing under the Companies' Creditors Arrangement Act will not affect SkyPower's projects in Ontario, Adler said. SkyPower obtained a $15 million debtor-in-possession loan to help manage short-term obligations, and is hoping the sale of its development business and wind turbines held in storage will get it back on its feet.
"The company has had discussions with several parties that have expressed a serious interest," he said.