Receiver confident of finding a buyer to save Proven Energy

Scottish farmers who have invested in Proven Energy 35-2 wind turbines are anxiously awaiting the outcome of a take-over of the business, which has fallen into receivership.

Directors of the company, which has a manufacturing facility in Stewarton, Ayrshire, and offices in East Kilbride, say they had no option but to call in the receivers following the discovery of a major defect in the drive shaft of its flagship turbine. It is estimated that about 500 of the affected turbines are in Scotland.

The company’s biggest investor, the Low Carbon Accelerator (LCA) fund, informed the Stock Exchange at the end of last week that it expected a substantial or total write-down of its £11.5 million investment in Proven. This was after being advised by Proven that the company would be unable to cope with its losses without a further cash injection.

Joint receiver, Blair Nimmo, head of restructuring at KMPG in Scotland, is confident a buyer can be found for the business, however. Sales information has been sent to about 40 companies and prospective buyers were given until 4pm yesterday to register their interest.

“Proven Energy is a well-known brand in the small wind sector, having been established for more than 30 years,” said Nimmo. “Although Proven has achieved substantial turnover growth in recent years, the company has made significant losses as it focused on product development, making it difficult for the business to cope financially with the cost of the product failure.”

With limited manufacturing taking place, 55 staff have been made redundant with immediate effect with 20 employees retained to assist with the sale of the business. Any buyer will be under no obligation to repair or replace defective turbines as warranties were issued by the company itself rather than by third party insurers.

The National Farmers Union of Scotland has advised farmers to switch off affected turbines, although it is known that many are ignoring this advice. “The news that Proven Energy has gone into receivership is a blow to the fledgling renewables industry in Scotland,” said NFUS communications director Bob Carruth. “It leaves many farmers who have erected or plan to erect Proven turbines uncertain of the way forward.”

The problem with the turbine is being attributed to a welding weakness, which has resulted in the rotor becoming detached from the main power shaft. Three failures have been detected in the past three months and, in one case during a recent storm, the rotor travelled a significant distance when becoming detached. Other turbines manufactured by the company are not affected.

Proven management has advised the receivers that the defect is “minor and can be repaired” and a solution has been proposed following an investigation by metallurgical experts.

Milnathort-based Icon Enegy, which is the main distributor of Proven turbines in Scotland, is in negotiation with investment partners with a view to mounting a rescue bid.