Once destined for liquidation, energy group OpenHydro has a new prospect of survival
Liquidators were only appointed to the ‘seriously insolvent’ group last month.
THE HIGH COURT has appointed an interim examiner to the OpenHydro group, which specialises in developing turbines that generate electricity from tidal energy.
Justice Miriam O’Regan has appointed insolvency practitioner Ken Fennell as interim examiner to Dublin-based OpenHydro Group Ltd, and its subsidiary Open Hydro Technologies Ltd, after being informed that an independent expert’s report showed the companies had a reasonable prospect of survival if certain steps are taken.
These include securing new investment, restructuring the group and the appointment of an examiner who would put together a scheme of arrangement with the group’s creditors that would allow it to survive as a going concern.
The application for examinership comes just weeks after the High Court appointed Michael McAteer and Stephen Tennant of Grant Thornton as joint provisional liquidators to the Dublin firms.
At the time, the court was told both companies were “seriously insolvent” with debts of approximately €280 million.
The appointment of provisional liquidators were sought by OpenHydro’s French parent and largest shareholder, Naval Energies SA, which has invested €260 million in the firms.
The French firm said it was no longer prepared to support the enterprises because the companies were loss-making. Naval Energies SA has operations in Ireland, Scotland, Canada, France and Japan.
Fresh appointment
Neil Steen, SC for a group of shareholders that own 12% of OpenHydro, told the judge that his clients believe putting the group into examinership would be more advantageous to all parties.
While his clients had limited access to the group’s financial information, they had commissioned an independent report which has shown that following a successful scheme of arrangement, the group could return to a positive cash generation in five years time.
Counsel submitted that appointing an interim examiner even for a short period would benefit the group and would not prejudice any party.
Steen said that his clients were attempting to “revive the company” and noted that the group’s 100 employees were being let go by the provisional liquidators.
He added what the group is involved in what is an emerging technology in the renewable energy sector and does require further investment.
New potential investors are interested in getting involved and the technology is “on the cusp” of being commercially viable, according to Steen.
Already one of its turbines, located in the Bay of Fundy in Nova Scotia, Canada was generating electricity and was plugged into the Canadian power grid shortly before the provisional liquidators were appointed, he added.
Massive losses
Steen also highlighted that while provisional liquidators have been appointed, no resolution has been passed for the winding up of the group.
The application for the appointment was made in the presence of lawyers who represented both the French parent and the provisional liquidators.
However, for legal reasons, those parties did not have the right to address the court on the application to place the group into examinership.
Justice O’Regan, who noted that the application was unusual given that provisional liquidators had been appointed some weeks ago, said she was prepared to appoint Fennell as interim examiner.
As a result of the ruling, the provisional liquidators will cease to act. However, the appointment was only on the basis that Fennell’s fees would be paid by the shareholders.
The matter was adjourned to next Tuesday’s sitting of the court.
When the appointment of provisional liquidators was sought last month, Rossa Fanning Bl, a representative for Naval, said the group sustained €160 million in losses last year.
Naval, which acquired its majority shareholding in OpenHydro in 2013, projected further loses of €128 million between now and 2026 if it continued to trade.
Naval also said that there has also been a breakdown in relations between the group’s senior management and its board of directors.
