Japanese Banks Extend Biggest-Ever Loan to Grow Nation's Wind Sector

UK wind turbine company to be bought by Japanese PPP for $874 million

Japan produces a lot of energy, ranking third in terms of electricity production after the United States and China. But it has some catching up to do in wind power, ranking 13th in the world in terms of installed wind capacity.

The sector has been growing, particular following the nuclear accidents in 2011 at Fukushima. Unlike the nuclear reactors, which were damaged by the Tohoku earthquake and tsunami, none of Japan's commercial wind turbines failed because of the disaster. And of course, if a turbine does fail, there's no deadly radiation to deal with.

PURCHASE OF UK WIND TECHNOLOGY GIVES BIG BOOST TO JAPAN

Now, thanks to a combined loan of JPY 20 billion (USD 253 million) from six Japanese banks, the nation's wind energy sector is getting a big boost. The loan will be used by Marubeni Corporation and the Innovation Network Corporation of Japan (INCJ) to buy Seajacks, a UK firm that builds vessels used to install offshore wind turbines (as well as oil and gas platforms in the North Sea), from Riverstone Holdings LLC for JPY 70 billion (USD 874 million). The deal was announced in March and the loan will be disbursed by the end of the month.

Marubeni is one of the largest trading companies in Japan. INCJ is a Tokyo-based public-private partnership (PPP), established as a temporary corporate entity (for a 15-year period beginning July 2009) between the Japanese government and 19 Japanese corporations.

ACQUISITION TO FUEL SEAJACKS' EXPANSION AND DEVELOPMENT

"Seajacks has become a leading brand in the offshore wind farm sector and with the backing of our new owners Marubeni and INCJ we expect Seajacks' future to be very bright," said Blair Ainslie, Managing Director of Seajacks UK. "To date, Seajacks has installed well over 200 wind turbines successfully at the high profile UK wind farm sites of Greater Gabbard, Walney 1, Walney 2 and Sheringham Shoal, all carried out with an exemplary safety record."

Designed to be continually operational year-round and withstand harsh environments, Seajack vessels comply with UK, Dutch and Danish operating regulations.

"This acquisition will allow Seajacks to expand and develop our business," said Ainslie, "with the main aim of building new vessels that will make the installation of offshore wind turbines even more efficient and flexible, so that wind farms can be completed and commissioned faster."

SOMETIMES, GOOD NEWS FOLLOWS BAD

The deal is particularly welcome press for Marubeni, as it emerges from a recent corruption scandal in which the company was charged in relation to a decade-long scheme to bribe Nigerian officials to secure contracts to build facilities for liquefied natural gas.

In January, after the Justice Department filed a deferred-prosecution agreement and a criminal information document charging the firm with one count of conspiracy and one count of aiding and abetting violations of the Foreign Corrupt Practices Act (FCPA), which prohibits the bribery of foreign officials for business purposes, Marubeni agreed to pay a settlement of JPY 4.5 billion (USD 56.4 million).

Currently, Marubeni, Mitsubishi Heavy Industries Ltd., Shimizu Corporation and the University of Tokyo are conducting experiments in offshore wind power. Ironically perhaps, those experiments are being done off the coast of Fukushima.

STEP INTO THE RED CIRCLE

The word "marubeni" is Japanese for "red circle." The epigraph of Jean-Pierre Melville's classic 1970 French crime film "Le Cercle Rouge" ("The Red Circle" in English) explains one meaning of the image:

"Siddhartha Gautama, the Buddha, drew a circle with a piece of red chalk and said: 'When men, even unknowingly, are to meet one day, whatever may befall each, whatever the diverging paths, on the said day, they will inevitably come together in the red circle.'"

Perhaps with Marubeni and INCJ's acquisition of Seajacks, those diverging paths refer to the public, private and academic sectors that are coming together within a circle that signals a new path towards renewable energy in Japan.

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NOTES

Global Wind Energy Council. Global Wind Statistics 2011. July 2, 2012. Accessed May 22, 2012.
Seajack International. Marubeni Corporation and INJC acquire Seajacks International. March 22, 2012. Accessed May 22, 2012.
Yomiuri Shimbun. 6 Japanese banks offer $253m to buy wind power firm. May 21, 2012. Accessed May 22, 2012.
Ibid., 2.
Samuel Rubenfeld. Marubeni Corp. Agrees To Pay $54.6 Million To Settle FCPA Probe. The Wall Street Journal. January 17, 2012. Accessed May 22, 2012.
Ibid., 3.

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image: A thermal power plant can be seen from Nakoso Beach, Iwaki-city, Fukushima, Japan, 2010. Soon, the nation's coasts will have wind farms (credit: Satoru Kikuchi, Flickr Creative Commons)