German wind park group Prokon files for insolvency

Prokon, a German financier, developer and operator of wind parks which financed itself via retail investors, has filed for insolvency, it announced on its website on Thursday.

“Prokon Regenerative Energien GmbH has filed for insolvency at the local court of Itzehoe,” in northern Germany, the company said in a letter addressed to its investors.

Set up in the 1990s, Prokon financed itself by selling profit-participation certificates to about 75,000 retail investors through a television advertising campaign.

Unlike shares, the certificates do not entitle holders to have any say in the running of the company, but promised a return of 6.0-8.0 percent.

A report in the daily Sueddeutsche Zeitung said that the Prokon case was causing the government to push the BaFin financial sector watchdog to monitor high-risk financial instruments more closely and possibly even banning them.

Prokon warned its investors of its difficulties over a week ago, and asked them not to withdraw their cash.

According to the company’s website just over half of them agreed to support Prokon, but that was not enough to avert insolvency.

“This is no way means it’s ‘lights out’ for Prokon,” the company insisted.

“We remain in operation and are confident that we will be able to surmount the current difficulties,” it said.

Prokon operates 50 wind parks in Germany and Poland.

Following the Fukushima nuclear disaster in Japan, Germany has decided to accelerate its planned phasing out of nuclear power and is seeking to boost development of renewable sources of energy instead.

The generous subsidies in the sector, financed via an energy tax, have led to a mushrooming of wind and solar energy parks.

But with the subsidies being cut and in face of ferocious competition from Asia, a number of German renewable energy companies have been forced to close in recent years.