Prokon Pleads With Investors as Insolvency Looms for Developer

Prokon Regenerative Energien GmbH, a German clean-power developer, collected 1.4 billion euros ($1.9 billion) from investors seeking to profit from the booming wind industry. It may now have to file for protection from creditors.

Prokon will be forced to file for insolvency this month if it doesn’t get agreement from almost all investors to delay withdrawals from profit-participation certificates, it said in a statement. The company has sold certificates to more than 75,000 investors, promising returns of 6 percent.

The developer, which owns 314 wind turbines and employs about 1,300 people, has relied on the certificates to attract funding. Fears of a possible bankruptcy can prompt holders of such rights to cancel their commitment, forcing the company to pay out according to the terms of the participation agreement. Such loans are less regulated than the official stock market.

Consumer protection is of “great importance,” especially in the “gray capital market,” German Justice Minister Heiko Maas said today, referring to unofficial trading practices. “The state must provide protection and precaution where consumers can’t protect themselves,” Maas said in a statement.

Prokon, based in Itzehoe in the northern state of Schleswig-Holstein, said that while it’s economically healthy and its wind farms are profitable, “panic” withdrawals are forcing it to repay money it doesn’t have. The developer has asked investors to delay withdrawals through October, and needs agreement from 95 percent by Jan. 20, its Jan. 10 filing shows.

Losing Money

“Don’t allow a planned insolvency to happen,” the company told investors, saying it lost money last year after paying out interest at an average of 8 percent. “Don’t let locusts and energy companies pinch a model company in the capital market with a unique, fair philosophy for little money.”

As funding concerns mount, Prokon also faces a probe in Schleswig-Holstein. Prosecutors in the city of Luebeck received two complaints against Prokon and have opened an investigation into “initial suspicion of fraud and other economic crimes,” Wenke Haker-Alm, a spokeswoman for the prosecutors, said today.

Calls to Prokon went unanswered. The company didn’t reply to a request for comment sent by e-mail.

Before it's here, it's on the Bloomberg Terminal.