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Green Energy Firm Juwi May Turn to Traditional Power Provider For Cash Infusion

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Stormy times ahead for Juwi, Germany's second-biggest windpark company.
  • Why it matters

    Why it matters

    Germany is pushing for energy transition. Now, one of the country’s prominent project developers for wind and solar energy plants is struggling financially and seeking an investor to bail it out.

  • Facts

    Facts

    • Several suitors have come calling including municipal energy supplier MVV Energie and utility company EnBW, but so far, no deal has been cut.
    • The crown jewel of Juwi’s holdings is its profitable subsidiary, Juwi IPP, which is generating a steady stream of revenues by supplying energy grids with renewable power.
    • Regardless of who invests in Juwi, its outspoken cofounder Matthias Willenbacher will lose a great deal of influence over the company he helped build.
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    Audio

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Matthias Willenbacher used to swear a blue streak.

He swore when his green energy company Juwi was enjoying one record-setting year after another. He swore about public utility companies that viewed his wind farm efforts as competition. He swore about energy companies interested only in profits, using perfidious methods to fight the energy transition in Germany. . .his energy transition. . .even as his company grew to become the nation’s second-largest wind farm operator with €1 billion ($1.3 billion) in annual sales and about 1,800 employees.

Mr. Willenbacher has become considerably quieter over the past few months and for good reason. It may well be that one of the targets of his profanities will soon have a major hand in what happens at Juwi corporate headquarters in Wörrstadt in Rhineland-Palatinate.

Juwi is in crisis mode. Hobbled by debt and under increasing pressure from banks – 400 jobs were recently cut in an effort to save money — the company is in dire need of a capital infusion. Insiders in financial circles say the banks that gave Juwi a syndicated loan of more than €250 million ($328 million) want to see an investor come aboard the struggling firm by the end of 2014. But who? Another environmentally-friendly company? A financial angel? A public utilities company? Or, even one of the larger energy companies that were the target of his ire?

“We are having constructive talks,” Mr. Willenbacher told Handelsblatt, but he didn’t name names. That’s likely to change soon.

 

Companies looking at Juwi likely are anxious to get their hands on Juwi IPP, a subsidiary focusing solely on renewable energy.

Handelsblatt has learned there have been top-level discussions at several energy companies interested in acquiring a stake in Juwi. A leading candidate is said to be the municipal utilities company MVV Energie in Mannheim in the southern state of Baden-Württemberg, the only publicly-traded public utility in Germany, with annual sales of about €4 billion ($5.26 billion). The company has investments in wind-generated energy, but it also has shares in thermal and coal-fired power plants including two large hard coal plants in Mannheim and Kiel, the capital of the northern German state of Schleswig-Holstein.

Sources said MVV has had “serious discussions” about making an investment and that Juwi, a leading developer of green energy plants, is willing to listen. Company cars from MVV have been seen on Juwi’s parking lot. If MVV decides to invest, the company will demand a say in Juwi’s operational activities, sources said. A spokesperson for MVV had no comment.

Even a nuclear power company has shown interest in Juwi. Karlsruhe-based EnBW, a publicly traded firm that’s the third-largest utility company in Germany, discussed investing in Juwi during a recent board meeting, sources said. And while no one will say anything official, EnBW is said to have ultimately rejected buying into the wind farm company, largely because it would not easily fit in with its other operations. Other companies in the industry said to be interested in Juwi are Munich-based utility company Thüga Group and the French energy giant GDF Suez.

Juwi can’t afford to be picky. Some potential partners such as the municipal utility network, Trianel, declined early on. And the banks will have a large say in the sale. They’re normally much more interested in the financial strength of the investor than green ideology.

Companies looking at Juwi likely are anxious to get their hands on Juwi IPP, a subsidiary focusing solely on renewable energy that supplies energy to several power grids and is generating money. It’s viewed within the industry as the crown jewel of the struggling company. In addition to Mr. Willenbacher and Juwi cofounder Fred Jung, investors in the IPP energy parks include the Gothaer Group insurance company.

The cost of buying into the renewable energy company will be the assumption of Juwi’s liabilities. The core business – planning, construction, sale of wind and solar parks — has been running well, but when Mr. Willenbacher and Mr. Jung moved into new fringe sectors, the balance sheet quickly suffered. Last year, Juwi reportedly suffered losses in the tens of millions. Restructuring costs will likely generate more hefty losses this year. Meanwhile, the company is running low on cash while its overall debt load threatens its ability to attract new money.

The severity of the situation will be known soon. An auditor is crunching the financial numbers for the 2013 financial report, which the company had hoped to release in August. “One point still has to be cleared up for the audit certification,” a Juwi spokesperson said. “It concerns the evaluation of the facilities.”

 

“Mr. Willenbacher appears convincing about keeping the shop together.”

MVV source

The futures of Mr. Willenbacher and Mr. Jung will probably be decided soon. If MVV takes a stake in Juwi, the founders likely will keep their posts on the board. “It would be fine with us if the two stay,” a source said, noting the number of talks between Juwi and MVV underscore their seriousness. “Mr. Willenbacher appears convincing about keeping the shop together.”

One thing is absolutely certain regardless of who buys into Juwi: Mr. Willenbacher will lose influence. Former managing director at DZ Bank, Theo Macke, will join the supervisory board on October 1, while industrialist Norbert Müller, the former chief executive officer of energy and IT systems provider Rittal International, will lead the board.

Meanwhile, Mr. Willenbacher’s brother, Norbert, will exit the supervisory board.

Juwi

This article was translated by David Andersen. Jeff Borden also contributed to this story. To contact the authors: doernfelder@handelsblatt.com, flauger@handelsblatt.com, weishaupt@handelsblatt.com 

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