Infigen Settles Disputes with Gamesaand Enters Long-term Agreements

Infigen Settles Disputes with Gamesaand Enters Long-term Agreements

17 June 2013

Infigen Energy (ASX: IFN) advises that the five US wind farm project companies utilising Gamesa turbines in which Infigen holds Class B membership interests (“US Project Companies”) have reached agreement with Gamesa Wind US LLC (“Gamesa”) to settle all outstanding legal proceedings between them in relation to various disputes that Infigen has previously disclosed to the market¹.

As part of the settlement, each of the US Project Companies have executed 15 year Warranty and Maintenance Agreements (“WMAs”) with Gamesa under which Gamesa will provide warranties, turbine maintenance services and replacement components for the turbines until June 2028 for an annual fee. To facilitate these WMAs, the US Project Companies will contribute US$2.9 million towards initial turbine repairs and make good provisions. No other cash amounts will be payable by either the US Project Companies or Gamesa to each other to settle their respective claims.

Key features of the new WMAs, which are effective immediately, include:

  • Gamesa being responsible for all turbine maintenance costs including labour and the cost of all wind turbine component replacements including blades (subject to agreed liability caps) for an annual fee which is substantially fixed;
  • Gamesa providing turbine availability warranties backed by liquidated damages provisions; and
  • Gamesa being entitled to certain performance payments if turbine availability exceeds prescribed levels.

As a result of these arrangements, Infigen Asset Management will cease to provide turbine maintenance services to these five US Project Companies but will continue to operate the wind farms and provide Balance of Plant service and maintenance.

Following these agreements approximately 61% of Infigen Energy’s US installed capacity (on an equity interest basis) will be covered by post-warranty agreements.

Infigen Energy’s Managing Director Miles George said, “This settlement and the new Warranty and Maintenance Agreements with Gamesa are the outcome of successful commercial negotiations that have reduced risk to Infigen. Furthermore these agreements provide Infigen with greater ability to manage the level and variability of our post-warranty wind farm costs which are expected to remain within or below the US$74 to $79 million range guided for FY13 into the medium term across our US portfolio.”

Details of the affected wind farms and Infigen Energy’s interest in them are attached in the Appendix.

¹ For a description of the legal proceedings that have been settled, see Note 10 (Contingent liabilities) to Infigen Energy’s Interim Financial Report for the half year ended 31 December 2012.




For further information please contact:
Richard Farrell, Investor Relations Manager
Ph: +61 2 8031 9900


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