OFFERING MEMORANDUM Global Offering of up to ... - Nordex

organizational structures to meet these demands. This has resulted in a strong dependence on human
and technical resources from outside the Nordex Group, in particular from Borsig Energy GmbH. In
addition, problems could arise with respect to the Group’s ability to recruit suitable professional staff,
which could have adverse consequences for the rapid establishment of the necessary structures.
The planned internal and external growth of the Nordex Group also requires the continual adaptation
of its organizational structures. In order to be able to manage this planned growth, the Management
Board and Supervisory Board intend to develop their human resources and technical and
organizational structures, especially in terms of accounting, planning and operational and financial
control systems. Moreover, the Company’s risk management system for early identification of adverse
developments has not yet been set up completely.
The Company will be faced with considerable organizational challenges to its ability to effectively
manage its current and future growth. There can be no assurance that delays in adapting and
expanding existing structures, and in introducing new organizational measures or new internal
systems, will not have adverse effects on the business, financial condition and results of operations of
the Nordex Group. Furthermore, there can be no assurance that additional structural measures beyond
those currently planned will not prove necessary, a situation that could result in an increase in the
operating expenses of the Nordex Group, which in turn could have a material adverse effect on its
business, financial condition and results of operations.
Dependence on a Key Product
The future development of the Nordex Group will depend on the acceptance of wind turbines, which
are comparatively new products. Nordex AG’s subsidiaries have focused on the development and
manufacture of wind turbines since 1985. The future market acceptance of the Group’s products is
difficult to assess, particularly in the case of the newly-developed Nordex N-80, currently the world’s
largest production wind turbine. The N-80 was first offered for sale in Spring 2000, and, as of February
28, 2001, only four units had been completed and put into commission. In addition, the potential sales
that could be generated from wind turbines produced by the Nordex Group are largely dependent on
governmental support for power generation from wind energy (see ‘‘—Legal Risks—Governmental
Regulation’’). There can be no assurance that the Company’s efforts to market its products, which will
result in it incurring considerable costs, will bring anticipated results or that the Company will reach its
strategic goal of establishing this new technology as the standard for the wind energy sector. If the
Company is unable to reach its goal of selling its new products in a greater scope than previously
achieved, and thereby improve its market position, the Company’s business, financial condition and
results of operations could be materially adversely affected.
Technical Risks and Technologies Utilized
The operation of wind turbines is subject to technical and physical risks, especially considering that for
some models, such as the Nordex N-80, there is no experiential data on long-term, full-time operation.
For this reason, no definitive statements can be made about the service life of such wind turbines or
their components, or about their long-term operational reliability. While the direct risk from limited
operational reliability and reduced life of wind turbines is borne by the wind farm operator, disputes
between wind turbine manufacturers and wind farm operators based on actual or alleged product
defects are relatively common (see ‘‘—Legal Risks—Litigation Risk’’).
Because the Nordex Group sources key components for the wind turbines it produces and sells from
outside suppliers, without having any control over the production process, the Group is subject to the
risk that components manufactured by outside suppliers could be defective. Whether or not the Nordex
Group is able to assert claims against its outside suppliers resulting from such defects is not only
dependent on the respective contractual agreements, but also on the creditworthiness of the relevant
outside supplier. Such defects, particularly if the Nordex Group is unable to assert claims for damages
against its outside suppliers, could have a long-term adverse effect on the business, financial condition
and results of operations of the Company.
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