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Noble Environmental IPO Faces Crosswinds

05/29/08 - 01:10 PM EDT

Kevin Kelleher

Noble Environmental Power's planned IPO brings good news and bad news for investors interested in the alternative energy sector.

The good news is that traders will finally have a pure-play stock in the growing market for wind power. Stocks such as Trinity IndustriesTRN and Otter TailOTTR have shown recent momentum due in large part to their respective operations in the sector.

The bad news is that, because the market is still nascent, investing in the IPO means putting money in a company with no revenue on its income statement to date -- and nearly $1 billion in debt.

The Essex, Conn., wind-energy company is filing for a public offering -- under the ticker NEPI -- only four years after it was founded. It's seeking as much as $375 million in proceeds to finance wind-turbine supply agreements and project developments.

Noble began operating its first wind parks in March 2008. So it doesn't have any revenue through its first 46 months in business. (Financials for the first quarter of 2008 aren't yet disclosed.)

But what it does have is $72 million in accumulated losses and massive debt, more than half of which comes due between one and three years from now.

And what does Noble have to offer for those losses and all that debt? A capacity to produce wind energy that will be growing for several years. Its wind farms can currently produce 282 megawatts of power from three wind farms in New York. By the end of the year, capacity will rise to 747 megawatts, as farms in New York and Texas come on line.

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