RE: mm2m Hi Oilman, although the cash grants do not add to the bottom-line in the sense of "income", it is tax-free and will allow WND to wipe out the bulk of long term debt associated with financing. I believe WND's interest rate on the LT debt is around 7.5% annualized. So for the 30M Kingman project, in which a third of it is being repaid by the tax grant, this amounts to roughly $2.25M in interest charges wiped out in the first year alone. This lowers their LT interest expense, as well as LT liability, which means that moving forward, the net income earned will be much higher than it would had that interest obligation not been wiped out. Furthermore, we get depreciation credits from this amount as well on the asset. This effect alone should add about
.05/sh a year to WND's bottom line. Obviously, what Windstar's grant will provide will be substantially more, with interest savings of around 12M/year. I do not believe this has been baked into the price yet because of several reasons:
1) We did not officially get the grant until today.
2) I believe we can't claim the depreciation credits until after the 1st year of operation/asset going live (someone will have to verify this)
3) We haven't seen our new assets put to the test yet. i.e. will the new assets generate positive revenue based on current environmental (wind strength) and economic situation (energy purchase price).
That said, this is probably around the time where smart money will have to make a decisive choice to ride on WND, or, to sit on the sidelines watching.
I do believe we still have a chance to hit $2.50 by year-end. Jeff has done a great job, despite some delays caused by 'external' forces. We got the tax grants on time, we have 106MW of Windstar up and running, Kingman has been generating revenue for 2 months now, and should be close to running at capacity. Aside from the SP being depreciated, is there anything particularily wrong with the company?