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Local investors buy back Minwind assets in bankruptcy sale

By
Lori Sorenson

The 11 Minwind turbines in southwest Rock County will remain under local ownership after a bankruptcy sale last month.
According to the terms of the court agreement that closed Nov. 12, a group of community investors purchased four turbines for $622,000.
The buyers are current and former investors of Minwind I-IV who organized under Community Renewables LLC.
First Farmers and Merchants Bank, Luverne, (Minwind’s lender) purchased the other seven turbines for $1.96 million in a non-cash transaction called a credit bid.
It’s estimated that the 300-some local shareholders, many of them farmers, stood to lose as much as $5.5 million in the Minwind bankruptcy.
Buying back the assets reportedly averted the costs of bankruptcy court and also the debilitating fines levied by the Federal Energy Regulatory Commission, for unfiled paperwork.
According to Dean Tofteland, the managing member of Community Renewables, the companies are going through a Chapter 11 bankruptcy, and are still subject to the court and the associated costs, which are substantial.
“The asset sale (auction) was the first part of the process of getting money back for the creditors and shareholders,” Tofteland said.
“There was never enough money to pay for the FERC-ordered refunds — incidentally, for damages that were not actually incurred by the utilities — and that was the reason for the bankruptcy.  The penalty was very extreme for such a small oversight.”
Aside from financial reasons, the new owners say their primary motivation was to keep the wind production local.
“The ownership had always been local,” Tofteland said. “In bankruptcy, anyone could bid on them, even Wall Street vulture funds.”
He said Community Renewables and First Farmers holding company were among five qualified bidders participating in the bankruptcy auction of Minwind’s assets.
The two buyers said Minwind’s financial troubles stem from last year’s $1.9 million penalty for not filing paperwork as a qualified renewable energy facility.
Tofteland said he’s optimistic about the future of wind production in Rock County.
“Although the bankruptcy was a complicated and expensive process, we feel successful that we are keeping the projects under local ownership,” he said, speaking for the group of investors who bought Minwind’s four original turbines.
“Rock County has always been cutting edge, whether it was developing one of the earliest ethanol plants, organizing the very first community wind farm or even building the Minnesota Veterans Home,” Tofteland said.
“We feel it is important to continue that heritage, and local ownership plays a key part.”
He said Community Renewables is already researching ways to keep the local wind production viable.
“We are looking at some of the newer controller technologies to optimize the turbines, such as more precise yaw calibration and pitch sensitivity,” he said.
Tofteland was one of the early investors in Minwind, which dates back to 2002 when the first four turbines were built near Hills. They produced power for Alliant Energy, which was sold in August to Sioux Valley Energy.
In 2004 seven more Minwind turbines were built north of Beaver Creek. This energy is sold to Xcel energy, which sends power via transmission lines to the Twin Cities.
The 11 turbines produce a combined output of roughly 15 1/2 megawatts per hour, which is enough energy to power a community 1 1/2 times the size of Luverne for an hour.
The “locally owned” business model for Minwind was based on the fact that each tower was organized as a separate business consisting of a single 1.65 mw wind turbine owned by 33 local investors.
The idea was that these projects benefit from the economies of scale and professional management of a larger project. Yet their cooperative-type business structure spreads financial benefits of community wind ownership to a large number of local farmers and landowners.
The turbines have continued to operate during the Chapter 11 bankruptcy case, which was filed in January.

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