Theolia CEO Plans to Keep More Assets After Capital Increase

Theolia SA, the French wind-power producer raising cash to avert bankruptcy, will change tack and keep some assets, according to its new chief executive officer.

“I want to keep certain assets on the balance sheet,” Fady Khallouf, who was appointed CEO on May 24, said in a telephone interview today. “We are prepared to take the risk of having a stake in our own projects.”

Theolia last week said it will raise 60 million euros ($74 million) in a rights offering through July 7, short of an original 100 million-euro target. Previous management announced the plan to restructure 253 million euros of convertible bonds and raise as much as 100 million euros in a share sale to help avoid creditor protection.

Khallouf said the strategy to retain ownership of an as-yet-undetermined proportion of wind-power assets will be a “balance” between previous management’s plan to sell completed projects to raise money for the company and that announced by former CEO Jean-Marie Santander in September, 2008.

Keeping more assets would make earnings more “predictable” and “could be more appealing to investors looking for a regulated profit base,” Khallouf said. “We aren’t in a hurry to sell assets. We will focus on when this is necessary for value creation or investment in other projects.”

Theolia, which reported in April that its full-year loss narrowed in 2009, plans to publish financial targets in September or October, Khallouf said, adding that the “outlook will be better” than last year.

Every Year

“The target is to be profitable every year,” he said.

The wind-power company will also seek to find outside investors to take minority stakes in projects while remaining the operator. “It’s a co-investment approach that will be done on a case-by-case basis,” he said.

The rights offering includes commitments of 30.2 million euros from Boussard & Gavaudan Asset Management LP and 15.1 million euros from Stiching Pensioenfonds ABP, Aix-en-Provence, France-based Theolia said in a statement.

The Oceane convertible bonds were due January 2014, with an option for investors to get repaid two years earlier.

Previous management had earmarked 40 million euros for projects and 60 million euros for bondholders as early partial repayment if the maximum was raised in the share sale.

Theolia managed a total of 782 megawatts at the end of March, 319 megawatts for its own account and 463 megawatts for third parties. Planned wind-power projects total 1,925 megawatts, including 1,703 in Europe, the company said in April.

Theolia has been preoccupied with its cash problems over the past 12 months and will now move to “more aggressive development” of projects, he said.

This includes completing about 134 megawatts of wind-power projects which are being built and getting permits for another 600 megawatts, he said. The rest of the pipeline is at “earlier stages” of development.

Theolia will retain France, Italy and Germany as “core countries” while searching for “more appropriate” strategies for Brazil and India, he said.

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