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Clipper sued for $60M amid layoffs
Credit: By Stephen Nellis | Pacific Coast Business Times | www.pacbiztimes.com 6 September 2012 ~~
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Translate: FROM English | TO English
Carpinteria-based Clipper Windpower faces a $60 million lawsuit from a wind farm developer shortly after it laid off 174 people.
First Wind Energy, a Boston-based wind farm developer with projects in New York, Hawaii and several other states, filed suit on Sept. 4 in Santa Barbara County Superior Court. Most of the complaint is sealed.
But what remains available of the lawsuit appears to outline rising alarm within First Wind that Clipper might not be able to deliver on a $60 million agreement for future turbines after the Carpinteria firm’s corporate parent discovered $91 million in warranty obligations and moved quickly to dispose of the company to a private equity group. First Wind is asking a judge to freeze Clipper’s assets while the dispute plays out.
Meanwhile, Clipper officials confirmed to The Gazette newspaper in Cedar Rapids, Iowa, that the company has slashed its work force by 174 people, including about 75 workers at its Midwestern turbine factory.
Clipper officials did not immediately return a request for comment.
Once one of the fast-growing companies in the Tri-Counties, Clipper has changed hands twice in two years. The company fell on hard times when cracked blade skins for its massive turbines resulted in $300 million in warranty costs, crippling its cash position.
United Technologies Corp., a Connecticut-based defense conglomerate, paid about $318 million for Clipper in a two-stage deal in 2010 as Clipper bled money. But earlier this year, UTC reported that it had set aside $91 million in potential warranty costs for Clipper’s business line. In March, UTC Chief Financial Officer Greg Hayes called the Clipper acquisition a mistake and said that retaining Clipper would “require hundreds of millions of dollars of investment – and quite frankly, we’re not going to do it.”
On Aug. 7, UTC sold Clipper to Beverly Hills-based Platinum Equity, a private equity group. That group did not immediately respond to a request for comment on the lawsuit.
A First Wind spokesman declined to comment. In its lawsuit, the company said that it has begun arbitration hearings – a method for resolving business disputes outside of courts – with Clipper. However, the Boston company said it filed its lawsuit because it feared the results of those arbitration hearings would be moot unless a judge granted what is known as a writ of attachment, an order that can freeze a company’s assets while a legal action unfolds.
“Substantial evidence exists that Clipper has serious financial problems, is unprofitable and is running out of cash,” First Wind wrote in its complaint.
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