PROVIDENCE, R.I. (WPRI) - The New York hedge fund backing Deepwater Wind, the company picked to build two wind farms off Rhode Island, has run into financial problems just as the project faces a court challenge.
D.E. Shaw & Co. fired 10 percent of its work force, or 150 people, to deal with a 46 percent plunge in the value of its assets, Bloomberg News and other outlets reported Tuesday. The fund's holdings fell to $21 billion as of Sept. 1, Bloomberg said.
D.E. Shaw is also conducting a strategic review of its investments and operations, according to the Financial Times. The fund had sunk "tens of millions of dollars" into Deepwater Wind as of June, a company executive told The Block Island Times .
In a statement, Deepwater Wind CEO William Moore said the upheaval at D.E. Shaw would not affect his company's offshore wind farm projects in Rhode Island.
"The D.E. Shaw group remains fully committed to its portfolio companies, including Deepwater Wind, and we look forward to continuing the long-term partnership, unchanged," he said.
An exclusive WPRI 12 poll set for release tonight shows the Deepwater project is popular with Rhode Islanders, with 56 percent of likely voters saying they would be willing to pay an additional $1.35 to $3 per month for electricity to support it. Only 32 percent opposed doing so, and 12 percent were not sure.
The news comes as lawyers prepare to argue before the R.I. Supreme Court over the R.I. Public Utilities Commission's (PUC) controversial decision to approve a contract between Deepwater and National Grid to buy power from the first of the two wind farms, a smaller development off Block Island.
The PUC rejected the proposed contract earlier this year, but reversed its decision after the General Assembly and Gov. Donald Carcieri, a strong supporter of the project, intervened to force a second review. Carcieri's administration picked Deepwater to develop wind farms here in September 2008.
D.E. Shaw has been one of the world's largest and most successful hedge funds since it was founded by the mathematician David Shaw in 1988. The Wall Street Journal described the layoffs there as "among the largest cutbacks in recent memory among major hedge-fund firms."
Deepwater Wind formally moved its headquarters from Hoboken, N.J., to Providence earlier this month. The company has also explored offshore wind farm projects in New Jersey, New York and Massachusetts.
The sixth and final person to plead guilty in a long-running kickback scheme that cost the U.S. Navy $18 million is set to be sentenced in federal court in Providence.
Two-year federal review of controversial taxpayer-backed loan fund forced changes.
Governor Lincoln Chafee has directed that both the Rhode Island and U.S. flags on all public buildings, grounds and naval vessels across the state to be flown at half-staff.
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