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Headwinds Too Strong for First Wind IPO

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The headwinds were too much for First Wind Holdings. The wind farm developer called off its IPO on Thursday, joining the ranks of other greentech hopefuls that have found the recent economic climate — or perhaps, their own financials — too unfavorable to risk the public markets.

First Wind’s problems had been foreseen. The Boston-based company had hoped to raise up to $300 million by offering shares at $24 to $26, which would have given the company a midrange market value of $1.2 billion. The company has some 504 megawatts of capacity in seven projects and another 232 megawatts under construction in four projects.

But with losses of $233 million and outstanding debt of $582.2 million as of the end of September, the company had acknowledged that it might be at risk of default, giving analysts little hope that it could meet its price targets. Indeed, the company first re-priced its IPO to $18 to $20 per share on Wednesday before canceling it altogether.

First Wind isn’t the only clean energy company facing a difficult time entering the public markets. Research firm Kachan & Co. found that an increasing amount of greentech investment this year has gone into shoring up startups that haven’t been able to engineer an exit via an IPO. The challenge is clear in the solar power field, where a large chunk of the $822 million invested in the second quarter went to later stage companies.

The poster child for this trend is thin-film solar panel maker Solyndra, which called off its $300 million IPO in June, choosing instead to raise $175 million from venture investors. In July, the company’s founding CEO Chris Gronet was replaced by Brian Harrison, former president and CEO of flash memory maker Numonyx. While the company cited unfavorable market conditions for ditching its IPO, it has also come under scrutiny for high production costs, ongoing operating losses and negative cash flows, according to an April note from auditor PricewaterhouseCooper.

Solyndra isn’t the only greentech company to back off the public markets. In August, China’s Trony Solar abandoned its IPO for a second time (the first was in December), citing unfavorable market conditions.

In the meanwhile, greentech startups that have gone the IPO route have faced mixed results. Tesla Motors (s TSLA) saw an impressive debut, with share prices rising well above their $14 to $16 target — despite the company’s long road yet to profitability.  Biofuel technology firm Amyris (s AMRS) saw a respectable debut in September with shares priced at $16 holding steady through early trading. Rare earth mining company Molycorp (s MCP), on the other hand, saw shares fall below an already reduced $14 per share target in its July IPO.

First Wind’s woes extended to those of one of its main suppliers, wind turbine maker Clipper Windpower, which had to be bought out by investor United Technologies (s UTC) earlier this month amidst declining orders for its gear. United Technologies paid $271 million for 49.5 percent of Clipper last year, but paid only $223 million for the rest of the company this month.

Indeed, it’s been a tough year for the wind power industry after a series of years of blockbuster growth. The global wind power industry is expected to be flat in 2010, with 37.7 gigawatts of installations, down 2 percent from 2009, Bloomberg New Energy Finance reported Thursday.

This year’s doldrums hit particularly hard in the U.S., which is expected to see a 39 percent year-over-year drop in installations, the report stated — bad news for U.S. developers like First Wind. China, on the other hand, saw a 25 percent boost in wind power installations compared to 2009, Bloomberg New Energy Finance said. Out of all the wind turbines installed this year, half were installed in China.

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