Some wind and solar energy companies could be headed for collapse as government funding priorities change, a UBS banker told the Reuters Restructuring Summit on Wednesday.
“Green” technology companies have benefited from government support such as tax revenue or grants, but many could face restructuring or bankruptcy once that support goes away, said Steven Smith, managing director and global head of restructuring for UBS Securities LLC.
If many of these companies go bust, it could echo the flop of ethanol companies, which began filing for bankruptcy in 2008, unable to support themselves amid fluctuating corn and oil prices.
“I’m just getting wind of some clean tech (restructuring needs),” Smith said, speaking to Reuters reporters and editors in New York. “In fact, I’m in pitch stage with one right now. Anytime you have industries relying on non-market forces to help encourage them, there can be teething pains.”
Smith declined to name his possible client, but said wind and solar-energy companies were most at risk in the green technology area. Any country that changed environmental regulations could also see bankruptcies, he said.
“For instance, Spain, where I think they’ve changed regulations very significantly, you could see companies that will need to be restructured.”
