Windreich offices searched after anonymous complaint

An investigation of Windreich, a leading developer of offshore wind farms, is underway by German public prosecutors. The company has also had its credit rating downgraded by rating agency, Creditreform.

An anonymous complaint about Windreich's financial management prompted Stuttgart public prosecutors to search the company's premises yesterday. German press reports claim that allegations focus on manipulation of the company's balance sheet and fraud, amongst other issues.

Windreich's sole owner, Willi Balz, has dismissed the suspicions as "absolutely groundless" in a letter to bond investors, issued yesterday. The letter states that "anonymous complaints, with simultaneous information to the press are...unfortunately a not uncommon phenomenon in efforts to defame competitors in the public eye".

The developer holds development rights for 22 German North Sea offshore wind projects, with its 400MW Global Tech 1 wind farm currently under construction. Last year, it sold its 210MW Deutsche Bucht offshore project to Scottish investor, Irvine Laidlaw.

Windreich was two working days late in paying the latest 6.5% annual interest on one of its bonds, WKN: A1CRMQ. The bond matures on 1 March 2015. All arrangements had been made to pay the interest on the scheduled date, wrote Balz to bond holders, "but the funds had to be used otherwise, and therefore I decided to increase my private financial interest in Windreich" . Amongst other measures "this included borrowing on the strength of debt-free real estate, which was the reason for the two day delay," he said.

The bond payment delay appears to have been linked to a credit rating downgrade by Creditreform. The agency cut Windreich's rating by three grades, from BBB+ to BB+.

The downgrade was primarily due to the recent insolvency of small wind turbine manufacturer, Fuhrländer, in which Windreich held a 9.45% stake. This resulted in an unscheduled write-off by Windreich of €21m, said Balz, who argues that this will have little real financial impact.

Nevertheless, the company announced a financial efficiency programme yesterday that includes transfer of planning and turnkey installation of offshore wind parks to subsidiary WKU in Hamburg, managed by Heiko Ross and Anil Srivastava. There are also plans to create a new subsidiary to explore the direct marketing of offshore and onshore wind generation, independent of Germany's feed-in tariff system.

Finally, Windreich is transforming itself from a stock holding company to a limited liability company, with formalities completed last month. It has also given notice of an end to its bonds being traded on the BondM segment of theStuttgart stock exchange. This will save €500,000 annually, says Windreich.