TORONTO, ONTARIO -- (Marketwire) -- 08/02/12 -- China Wind Power International Corp. (TSX VENTURE:CNW) ("China Wind Power" or the "Company") previously announced on July 27, 2012 that the Company would not file its audited annual financial statements and related management discussion and analysis ("MD&A") for the year ended March 31, 2012 within the prescribed time period as required by the Canadian securities laws. The Company expects to record an allowance for doubtful account of up to $13.6 million in the Company's annual financial statements for its financial year ended March 31, 2012 in relation to pre-payments for equipment made to a supplier of wind turbines in prior years. This supplier has not delivered the related equipment nor have they refunded the pre-payments received. The total outstanding amount owed to the Company as at March 31, 2012 is $13.6 million.
The Audit Committee, and an Independent Committee established by the Board of Directors consisting of two Canadian independent directors, has requested additional information for the above noted transaction from management and has requested to review transactions with related parties to ensure proper accounting treatment and disclosure. As a result, the Company was unable to file its annual financial statements and related documents on time due to the cumulative effect of the following factors:
-- Management of the Company is responding to information requests from the
Audit Committee and the Independent Committee. Management expects to
provide all requested documentation, a detailed description of the
transactions noted above and an explanation of the business reasons for
the transactions in the coming days;
-- Management of the Company is in discussions with this supplier with the
intent of seeking a resolution to this matter. The Company intends to
pursue all avenues to collect the outstanding amount; and
-- Management of the Company and the Audit Committee must meet to discuss
the proper accounting treatment and disclosure for the doubtful account
and the annual financial statements must be approved by the Board of
The Company is diligently working with its Audit Committee to resolve this issue and anticipates that the duration of its default will be approximately two to four weeks.
The Company has made an application to the Ontario Securities Commission and other relevant securities regulatory authorities under applicable securities legislation for the issuance of a management and insider cease trade order ("MCTO") in connection with the anticipated filing delay. If an MCTO is granted, it would result in a formal and temporary order that prohibits certain current and former directors, officers and other insiders of the Company from trading in the Company's securities, for as long as the required filings have not been completed. An MCTO would generally not affect the ability of persons who are not, or who have not been, directors, officers or other insiders of the Company to trade in the Company's securities.
Pending the filing of the Company's annual financial statements and MD&A, and under the guidelines pursuant to which the MCTO may be issued, the Company intends to satisfy the Alternate Information Guidelines pursuant to National Policy 12-203 - Cease Trade Orders for Continuous Disclosure Defaults ("NP 12-203"), including the filing of bi-weekly Default Status Reports, as long as it is in default of the filing requirements. If an issuer cease trade order were imposed in lieu of an MCTO, it would prevent all trading in the securities of the Company within the applicable jurisdiction. This news release constitutes a "default announcement" made pursuant to section 4.3 under NP 12-203.
About China Wind Power International Corp.
China Wind Power International Corp. is an Ontario company that is uniquely positioned to capitalize on the growing demand for wind power in China. The Company indirectly holds the exclusive rights for wind energy development in Du Mon County, Heilongjiang Province, which has a demonstrated potential installed capacity of 1,150 MW of wind energy developable over an area of 612 square km. While 1,150 MW represents the Company's long-term potential for wind power in the area, its current plans are for building out approximately 800 MW over five development phases. The Company's common shares are listed on the TSX Venture Exchange under the symbol "CNW".
Caution Regarding Forward-Looking Statements
Certain statements that are not historical facts made in this press release may be forward-looking statements subject to risks and uncertainties. Statements containing words such as "will", "could", "expect", "may", "anticipate", "believe", "intend", "estimate", "plan" and other similar expressions are forward-looking statements that represent management's beliefs at the time the statements are made and are based on certain factors and assumptions including the resolution of the financial statement matter; the ability of the Company to prepare and file its annual financial statements and management's discussion and analysis on a timely basis; the issuance of a management and insider cease trade order in connection with the anticipated filing delay by the applicable securities regulatory authorities. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events to differ materially from those projected in forward-looking statements. Important factors that could cause actual results to differ materially from the Company's expectations including uncertainties involving the progress of resolving the financial statement matter; the completion of the Company's filing of its annual financial statements and management's discussion and analysis; the issuance of a management and insider cease trade order in connection with the anticipated filing delay by the applicable securities regulatory authorities; and other risks and uncertainties as more fully described in the Company's in the information circular dated November 2, 2011, its Management's Discussion and Analysis for the 2011 fiscal year and the three and nine months ended December 31, 2011 and in the Company's other filings with securities regulatory authorities, which are available under the Company's profile at www.sedar.com. Readers are cautioned that the foregoing lists of risks, uncertainties, assumptions and other actors are not exhaustive; therefore, readers should not place undue reliance on the forward-looking statements contained herein. Except as required by applicable securities laws, the Company undertakes no obligation to update any forward looking statement to reflect events or circumstances after the date on which such statement is made.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
China Wind Power International Corp.
Chief Financial Officer